CHICAGO  CONFERENCE 
ON  TRUSTS 


SPEECHES,    DEBATES,    RESOLUTIONS, 

LIST  OE  THE   DELEGATES, 

COMMITTEES,  ETC. 


CHICAGO 
THE   CIVIC   FEDERATION   OF   CHICAGO 

1900 

'- 


ILLINOIS  HISTORICAL  SURVEY 


GEORGE  W.  ATKINSON 
Governor  of  West  Virginia 


W.  A.  POYNTER 
Governor  of  Nebraska 


HAZEN  S.  PINGREE 
Governor  of  Michigan 


W.  E.  STANLEY 
Governor  of  Kansas 


EDWARD  SCOFIELD 
Governor  of  Wisconsin 


SPEECHES,    DEBATES,   RESOLUTIONS, 

LIST    OF  THE   DELEGATES, 

COMMITTEES,   ETC. 


CHICAGO 
THE    CIVIC    FEDERATION    OF    CHICAGO 

1900 


COPYRIGHT,  1899 

By   FRANKLIN   H.   HEAD 

CHICAGO 


STfje  Uafcrsftif  \3nss 

R.    R.    DONNELLEY   &   SONS    COMPANY 
CHICAGO 


LOCAL  COMMITTEE  OF  ARRANGEMENTS  FOR 
CHICAGO  CONFERENCE  ON  TRUSTS. 

FRANKLIN  H.  HEAD,  President  Civic  Federation  of  Chicago,  Chairman. 
RALPH  M.   EASLEY,  Secretary  Civic  Federation  of  Chicago,  Secretary. 

LAWRENCE  E.  McGANN, 

Commissioner  of  Public  Works. 
WILLIAM  C.  HOLLISTER, 

Hollister  Brothers. 
F.  W.  MORGAN, 

Manufacturer  of  Rubber  Goods. 
E.  S.  LACEY. 

Ex-Comptroller  of  the  Currency. 
A.  C.  BARTLETT, 

President  National    Association   of 
Merchants  and  Travelers. 

E.  G.  KEITH, 

Pres't  Metropolitan  National  Bank. 
A.    M.   COMPTON, 

Credit  Man,  John  V.  Farwell  Co. 
JOHN  W.  ELA, 

General  Counsel  National  Business 
League. 

ALEXANDER  H.  REVELL, 

Wholesale  Furniture  Dealer. 

W.  D.  KERFOOT, 

City  Comptroller. 

GRAHAM  TAYLOR, 

Warden  Chicago  Commons   Social 
Settlement. 

LA  VERNE  W.  NOYES, 

Manufacturer. 
PAUL  J.  MAAS, 

Ex-Organizer  American   Federation 
of  Labor. 

JOSIAH  L.  LOMBARD, 

Ex-President    Civic    Federation    of 
Chicago. 


HENRY  S.  TOWLE, 

President  Chicago  Bar  Association. 

JOHN  M.  STAHL, 

Sec'y  Farmers'  National  Congress. 

WILLIS  YOUNG, 

President   Northwestern    Traveling 
Men's  Association. 

WM.   R.  HARPER, 

President  University  of  Chicago. 

D.  K.  CLINK, 

Past  Counselor  United  Commercial 
Travelers. 

S.  LYON, 
President  Board  of  Trade. 

W.    B.   CONKEY, 

President     Illinois     Manufacturers' 
Association. 

M.    W.    PIIALEN, 

President  Traveling  Men's  Protect- 
ive Association. 

EDWARD  CARROLL, 

President  Building  Trades  Council. 

JAMES  O'CONNELL, 

President  International  Association 
of  Machinists. - 


R. 


CHARLES  W.  GINDELE, 

President    Builders'    and    Traders' 
Exchange. 

HENRY  WADE  ROGERS, 

President  Northwestern  University. 

GEORGE  A.  SCHILLING, 

Ex-State  Labor  Commissioner. 

JAMES  H.  ECKELS, 

Ex-Comptroller  of  the  Currency. 

HARRY  P.  ROBINSON, 
Editor  Railway  Age. 

GF.O.   R.   PECK, 

General  Counsel  C.  M.  &  St.  P.  Ry. 
Co. 

FRANKLIN  MACVKACH, 
Wholesale  Grocer. 


ROBERT  J.  BENNETT, 

Wholesale  Grocer. 
WILLIAM  A.  GILES, 

Capitalist. 
A.  F.  GARTZ, 

Treasurer  Crane  Company,  Machin- 
ery Manufacturers. 

ALFRED  L.  BAKER, 

President  Chicago  Stock  Exchange. 


CONTENTS. 

HENRY  C.  ADAMS,  Statistician  Interstate  Commerce  Commission  and 
Professor  Political  Economy,  University  of  Michigan. — A 
Statement  of  the  Trust  Problem 35 

J.  DANA  ADAMS. — How  to  Judge  the  Right  of  the  Trusts  to  Live 544 

EDWARD  C.  AKIN,  Attorney-General  of  Illinois,  representing  Gov- 
ernor John  R.  Tanner. — Address  of  Welcome 9 

G.  W.  ATKINSON,  Governor  of  West  Virginia. — Benefits  and  Hard- 
ships of  Combinations 98 

HENRY  D.  BAKER,  Associate  Financial  Editor  New  York  "Evening 
Post." — Trusts  an  Early  Incident,  but  no  Longer  the  Product  of 
Present  Prosperity 422 

EDWARD  W.  BEMIS,  Bureau  of  Economic  Research,  New  York. — 
Trust  Evils  and  Suggested  Remedies :  A  Problem  for  a  Genera- 
tion to  Setttle 394 

HENRY  W.  BLAIR,  of  New  Hampshire ;  ex-U.  S.  Senator. — The  Tariff 
Not  Mother  of  Trusts,  but  Mother  of  American  Wealth  and 
Power 604 

CHARLES  J.  BONAPARTE,  Attorney,  Baltimore. — Trusts  a  Natural 

Industrial  Feature  and  Should  Not  Suffer  Legislative  Restraint.  620 

JOHN  GRAHAM  BROOKS,  Lecturer  University  of  Chicago. — Are  the 

New  Combinations  Socially  Dangerous  ? 57 

WILLIAM  JENNINGS  BRYAN. — The  Man  Before  the  Dollar :  Society 
Not  Enthralled  to  an  Institution  Solely  Because  the  Institution 
Exists :  The  Remedy  of  Congressional  License 496 

WILLIAM  JENNINGS  BRYAN. — Reply  to  Mr.  Foulke 582 

I.  D.  CHAMBERLAIN,  Executive  Committee  Order  Knights  of  Labor. 
— The  Trust  as  a  Conspiracy  Against  Civilization 366 

JOHN  BATES  CLARK,  Columbia  University. — The  Necessity  of  Re- 
straining Monopolies  While  Retaining  Trusts 404 

W.  BOURKE  COCKRAN. — Effect  Produced  by  Combinations,  Whether 
of  Capital  or  Labor,  upon  the  General  Prosperity  of  the  Com- 
munity    462 

W.  BOURKE  COCKRAN. — Reply  to  Mr.  Bryan  and  Answers  to  Various 

Questions 5^6 

COMMITTEE  ON  ORGANIZATION  AND  PROGRAM - 96 

COMMITTEE  ON  RESOLUTIONS 262 

JOHN  B.  CONNER,  Chief  Indiana  Bureau  of  Statistics. — Neglect  of 
the  Old  Principle  of  "Public  Benefit"  in  Recent  Corporation 
Laws 340 


STEPHEN  P.  CORLISS,  New  York  Traveling  Men's  Association. — 
Trusts :  Their  Abuses  and  Remedies 136 

E.  C.  CROW,  Attorney-General  of  Missouri. — Restraint  of  the  Cor- 

poration   .'. 106 

JEFFERSON  DAVIS,  Attorney-General  of  Arkansas. — The  Arkansas 
Anti-Trust  Law 271 

JAMES  B.  DILL,  North  American  Trust  Company. — Overcapitaliza- 
tion and  Concealment 568 

P.  E.  DOWE,  President  Commercial  Travelers'  National  League. — 
Trusts  and  Their  Effects  Upon  Commercial  Travelers 115 

JAMES  W.  ELLSWORTH,  Merchant,  New  York. — The  Advantages  of 
Rightful  Combination 618 

STUYVESANT  FISH,  President  of  the  Illinois  Central  Railroad  Com- 
pany.— The  Economic  History  of  a  Long-Established  Factor  in 
American  Transportation 555 

WILLIAM  FORTUNE,  President  Indiana  State  Board  of  Commerce. — 
A  Plea  for  Moderate  Action 53 

CHARLES  FOSTER,  ex-Governor  of  Ohio. — Desirability  of  Trusts. '....  268 

WILLIAM  DUDLEY  FOULKE. — Why  Trusts  Cannot  Be  Entirely  Over- 
thrown   451 

WILLIAM  DUDLEY  FOULKE. — In  Criticism  of  Certain  Views  of  Wil- 
liam J.  Bryan 579 

GEORGE  R.  GAITHER,  JR.,  Attorney-General  of  Maryland. — Maryland 
and  the  Trusts 285 

M.  M.  GARLAND,  ex-President  Amalgamated  Association  of  Iron  and 
Steel  Workers. — An  Iron  and  Steel  Worker's  View  of  Combina- 
tion   349 

SAMUEL  GOMPERS,  President  American  Federation  of  Labor. — The 
Control  of  Trusts 329 

S.  H.  GREELEY,  National  Grain  Growers'  Association. — Railroad  Re- 
sponsibility for  Objectionable  Combinations:  The  Farmers  and 
the  Chicago  Grain  Market 202 

LAURENCE  GRONLUND  (since  deceased),  Socialist,  Editorial  Staff 
"New  York  Journal." — The  Trust  as  a  Phenomenon  to  Be 
Handled  Fearlessly  and  Utilized  for  the  Public  Weal 569 

GEORGE  GUNTON,  Publisher  "Gunton's  Magazine." — The  Public  and 
the  Trusts 276 

F.  E.  HALEY,  Secretary  Iowa  State  Traveling  Men's  Association. — 

Federal  Control  by  Explicit  and  Comprehensive  Statute 615 

J.  C.  HANLEY,  National  Farmers'  Alliance. — Foreign  Markets  and 
American  Shipping :  Extension  of  Competition  for  Agricultural 

Relief 209 

AZEL  F.  HATCH,  Member  Illinois  Bar. — Causes,  Dangers,  and  Bene- 
fits of  Combinations 65 

JOHN  W.  HAYES,  General  Secretary  and  Treasurer  Order  Knights 
of  Labor. — The  Social  Enemy 331 

FRANKLIN  H.  HEAD,  President  Civic  Federation  of  Chicago. — Intro- 
ductory Address 7 


BYRON  W.  HOLT,  New  England  Free  Trade  League. — Tariff  the 
Mother  of  Trusts 171 

WILLIAM  WIRT  HOWE,  New  Orleans  Board  of  Trade. — Formulation, 
by  Permanent  Chairman  of  the  Conference,  of  Certain  Sug- 
gested Methods  for  the  Solution  of  the  Trust  Problem 622 

E.  C.  IRWIN,  President  National  Board  of  Fire  Underwriters. — 
Fire  Insurance  Cooperative,  But  Not  a  Trust :  Its  Relation  to 
the  Community 437 

JEREMIAH  W.  JENKS,  Statistician  United  States  Industrial  Commis- 
sion and  Professor  of  Political  Economy  Cornell  University. — 
Elements  of  the  Trust  Problem 27 

AARON  JONES,  Grand  Master  National  Grange  Patrons  of  Hus- 
bandry.— Federal  and  State  Re'gulation  of  Trusts 218 

SAMUEL  M.  JONES,  Mayor  of  Toledo,  Ohio. — The  Trust  as  a  Labor- 

Saving  Machine  in  the  Development  of  a  Large  Programme.  ..  602 

EDWARD  QUINTON  KEASBEY,  Member  New  Jersey  Bar. — New  Jersey 
and  Trusts 383 

DAVID  KINLEY,  Professor  University  of  Illinois. — Analysis  of  Indus- 
trial Statistics  Collected  by  the  Civic  Federation  of  Chicago.  .. .  530 

MARTIN  A.  KNAPP,  Chairman  Interstate  Commerce  Commission. — 
Equality  of  Rights  in  Transportation  Agencies 234 

M.  L.  LOCKWOOD,  President  American  Anti-Trust  League. — Prop- 
erty Rights  and  Human  Rights 375 

CYRUS  G.  LUCE,  ex-Governor  of  Michigan. — The  Farmer :  The  Man 
Who  Can  Declare  His  "Live  and  Let  Live"  Policy  at  the  Ballot 
Box 230 

EMERSON    McMiLLiN,    Banker,    New    York. — Combinations    in   the 

Main  Beneficial 617 

S.  A.  MARTIN,   President  of  Wilson  College. — Recognition  of  the 

Inevitable  and  Adjustment  Thereto 577 

Meeting  of  the  Committee  on  Resolutions " 565 

THOMAS  J.  MORGAN,  Socialist. — The  Trust  from  a  Socialist  Point 

of  View 319 

J.  STERLING  MORTON,  ex-Secretary  Department  of  Agriculture. — No 

Monopoly  Where  Trade  and  Commerce  Free 225 

PAUL  MORTON,  Third  Vice-President  Atchison,  Topeka  &  Santa  Fe 
Railroad  System. — Railroad  Cooperation  More- Economic  Than 
Unrestricted  Competition ' 249 

G.  W.  NORTHRUP,  JR.,  Member  Illinois  Bar. — Practical  Remedies  for 

Industrial  Trusts 522 

JOSEPH  NIMMO,  JR.,  President  National  Statistical  Association. — 
The  Limitation  of  Competition  and  Combination  as  Illustrated 
in  the  Regulation  of  Railroads 156 

FRANCIS  G.  NEWLANDS,  Member  Congress,  Nevada. — Federal  Taxa- 
tion as  a  Means  of  Regulation 305 

H.  T.  NEWCOMB,  United  States  Census  Office. — Where  Competition 
Is  Present  Discrimination  Cannot  Be  Absent:  An  Argument  for 
the  Restoration  of  the  Pooling  Privilege  with  Federal  Super- 
vision   237 

HENRY  W;  PEABODY,  Merchant,  Boston. — The  Menace  of  Monopoly.  616 

v 


HAZEN  S.  PINGREE,  Governor  of  Michigan. — The  Effect  of  Trusts  on 

Our  National  Life  and  Citizenship 263 

HAZEN  S.  PINGREE,  Governor  of  Michigan. — A  Letter  to  Professor 

George  Gunton 598 

Louis  F.  POST,  Single  Tax  League  of  the  United  States.— Where 

Single  Taxers  Stand :    The  Lesson  of  the  Giant  with  His  Feet 

on  the  Ground 314 

W.  P.  POTTER,  Member  Pennsylvania  Bar.— Consolidation  a 

Natural  Growth  with  Many  Obviously  Good  Results 299 

Preface 5 

LAWSON  PURDY,  New  York  Reform  Club. — The  Wrong  of  Special 

Privilege 166 

JAMES  H.  RAYMOND,  Chicago  Patent  Law  Association. — Monopolies 

Under  Patents  and  the  Industrial  Effects  Thereof 514 

EDWARD  P.  RIPLEY,  President  Atchison,  Topeka  &  Santa  Fe  Railway 

System. — How  Consolidation  Has  Worked  Out  in  the  Case  of 

One  of  the  Great  Common  Carriers 552 

SAMUEL  ADAMS  ROBINSON,  American  Protective  Tariff  League. — 

The  Antidote  of  Free  Trade  and  the  International  Trust 193 

A.  E.  ROGERS,  University  of  Maine. — Historical  Development  of  the 

Corporation,  with  Exclusion  of  the  Principle  of  Public  Benefit.  409 

Roll  of  Delegates 12 

EDWARD  ROSEWATER,  Publisher  Omaha  "Bee." — Legislative  Dis- 
cipline to  Make  Trusts  Harmless 459 

DAVID  Ross,  Secretary  Illinois  Bureau  of  Labor  Statistics. — Com- 
binations the  Inevitable  Incidents  of  Industrial  Evolution 371 

U,  M.  ROSE,  Little  Rock  Board  of  Trade.— The  Greatest  Problem 

Since  Slavery 310 

JOHN  F.  SCANLAN,  Western  Industrial  League. — Trusts  and  Free 

Trade 177 

CHARLES  A.  SCHIEREN,  ex-Mayor  of  Brooklyn,  N.  Y. — Competition 

the  Best  Regulator 621 

.  GEORGE  A.  SCHILLING,  ex-Secretary  of  the  Bureau  of  Labor  Statistics 

of  Illinois.— Strength  of  the  Trusts  in  Props  of  Special  Privilege  612 
J.  G.  SCHONFARBER,  Executive  Committee  Order  Knights  of  Labor. 

— Corporate  Ownership  of  Railroads  the  Backbone  of  the  Trust ; 

Protective  Tariff  Its  Right  Arm 347 

HORATIO  W.  SEYMOUR,  Publisher  Chicago  "Chronicle." — Excessive 

Financial  Energy . 188 

E.  J.  SMITH,  Birmingham,  England. — Explanation  of  the  New 

Trades  Combination  Movement  in  England 141 

T.  S.  SMITH,  Attorney-General  of  Texas. — The  Right  of  a  State  to 

Regulate  All  Corporations  Doing  Business  Within  It 567 

JOHN  W.  SPENCER. — The  Free  List  and  a  Graduated  Corporation 

Tax  as  Trust  Remedies 533 

JOHN  M.  STAHL,  Secretary  Farmers'  National  Congress. — A  Farmer 

on  Trusts:  Regulation  from  the  Protectionist's  Standpoint 222 

W.  E.  STANLEY,  Governor  of  Kansas. — William  Jennings  Bryan 

Introduced 49° 


A.  W.  STILL,  Editor  "Gazette,"  Birmingham,  England. — A  Criticism 
of  the  Smithsonian  System  of  Trades  Combination :  Reform 
Without  an  Economic  Feature 146 

CLEM  STUDEBAKER,  Manufacturer,  South  Bend,  Ind. — The  Economic 
Advantages  of  Combination 575 

H.  H.  SWAIN,  Montana  State  Normal  School. — The  Relation  of  an 

Unstable  Currency  to  the  Formation  of  Trusts 537 

HOWARD  S.  TAYLOR,  Prosecuting  Attorney,  City  of  Chicago. — Ad- 
dress of  Welcome 10 

ROBERT  S.  TAYLOR,  Member  Indiana  Bar. — The  Main  Problem — 

How  Shall  We  Distinguish  Among  Corporations? 72 

F.  B.  THURBER,  President  United  States  Export  Association. — The 
Bogey  Monster:  A  Thing  to  Be  Regulated  and  Encouraged. . . .  124 

BENJAMIN  R.  TUCKER,  Editor  New  York  "Liberty." — The  Attitude 
of  Anarchism  Toward  Industrial  Combinations 253 

WILLIAM  H.  TUTTLE,  Member  Illinois  Bar. — The  Legal  Status  of 

Combinations  of  Labor 354 

THOMAS  UPDEGRAFF,  ex-Member  of  Congress,  Iowa. — Protection 

and  Trusts 187 

T.  B.  WALKER,  Minneapolis  Board  of  Trade. — Trusts  from  a  Busi- 
ness Man's  Standpoint 539 

J/-MES  R.  WEAVER,  Professor  Political  Economy  de  Pauw  University. 
— Efficacy  of  Economic  Checks  in  Regulating  Competitive 
Trusts 293 

A.  Leo  WEIL,  Member  Pennsylvania  Bar. — The  Combination  in  His- 
tory, Ethics,  and  Political  Economy :  Should  It  Be  Prevented 
by  Law  ?  77 

HENRY  WHITE,  General  Secretary  United  Garment  Workers  of 
America. — A  Period  of  Doubt  and  Darkness  in  a  New  Industrial 
Era 323 

C.  D.  WILLARD,  Los  Angeles  Board  of  Trade. — The  Trust  as  a  Logi- 
cal Development  Impossible  to  Extinguish  and  Difficult  to 
Regulate 545 

DUDLEY  G.  WOOTEN,  Member  Texas  Legislature. — Principles  and 

Sources  of  the  Trust  Evil  as  Texas  Sees  Them 42 

JOHN  I.  YELLOTT,  Member  Maryland  Bar. — The  Trust:  An  Institu- 
tion Pronounced  by  the  United  States  Supreme  Court,  in  1895, 
Beyond  Congressional  Control 427 


vii 


PORTRAITS. 

EDWARD  C.  AKIN 232 

GEORGE  W.  ATKINSON,  Governor  of  West  Virginia Frontispiece 

HENRY  D.  BAKER 328 

EDWARD  W.  BEMIS 264 

KENRY  W.  BLAIR 72 

WILLIAM  JENNINGS  BRYAN 72 

JOHN  BATES  CLARK 296 

W.  BOURKE  COCKRAN 72 

MORRIS  M.  COHN 136 

A.  M.  COMPTON 328 

JOHN  B.  CONNER.  136 

STEPHEN  P.  CORLISS,  Third  Vice-Chairman 40 

JEFFERSON  DAVIS 264 

J/SMES  B.  DILL 296 

P.  E.  DOWE 360 

RALPH  M.  EASLEY,  Secretary 40 

WILLIAM  FORTUNE 232 

CHARLES  FOSTER 72 

GEORGE  R.  GAITHER,  JR 264 

M.  M.  GARLAND 200 

SAMUEL  GOMPERS 200 

LAURENCE  GRONLUND 168 

GEORGE  GUNTON 264 

F.  E.  HALEY , 456 

J.  C.  HANLEY.  520 

AZEL  F.  HATCH 232 

JOHN  W.  HAYES 264 

FRANKLIN  H.  HEAD,  Temporary  Chairman * 40 

JOHN  HILL,  JR 520 

BYRON  W.  HOLT 360 

WILLIAM  WIRT  HOWE.  Permanent  Chairman 40 

JEREMIAH  W.  JENKS 232 

HENRY  V.  JOHNSON,  Second  Vice-Chairman 40 

AARON  JONES : 520 

EDWARD  QUINTON  KEASBEY 200 

MARTIN  A.  KNAPP 104 

M.  L.  LOCKWOOD 296 

ix 


CYRUS  G.  LUCE 104 

PAUL  J.  MAAS 328 

THOMAS  J.  MORGAN 136 

J.  STERLING  MORTON >. 104 

PAUL  MORTON 168 

H.  T.  NEWCOMB 168 

FRANCIS  G.  NEWLANDS 104 

JOSEPH  NIMMO,  JR 360 

G.  \V.  NORTHRUP,  JR 360 

K.  W.  PALMER 136 

HAZEN  S.  PINGREE,  Governor  of  Michigan Frontispiece 

Louis  F.  POST 264 

W.  P.  POTTER 456 

W.  A.  POYNTER,  Governor  of  Nebraska Frontispiece 

LAWSON  PURDY 360 

JAMES  H.  RAYMOND 168 

EDWARD  P.  RIPLEY 296 

SAMUEL  ADAMS  ROBINSON ' 168 

A.  E.  ROGERS . .  .• 456 

EDWARD  ROSEWATER 296 

DAVID  Ross 328 

U.  M.  ROSE 200 

JOHN  F.  SCANLAN 360 

GEORGE  A.  SCHILLING 328 

J.    G.    SCHONFARBER 296 

EDWARD  SCOFIELD,  Governor  of  Wisconsin Frontispiece 

HORATIO  W.  SEYMOUR 104 

T.  S.  SMITH 520 

JOHN  W.  SPENCER 456 

JOHN  M.  STAHL 520 

W.  E.  STANLEY,  Governor  of  Kansas Frontispiece 

HOWARD  S.  TAYLOR 232 

ROBERT  S.  TAYLOR 104 

FRANCIS  B.  THURBER 232 

BENJAMIN  R.  TUCKER 168 

WILLIAM  H.  TUTTLE 328 

THOMAS  UPDEGRAFF 520 

T.  B.  WALKER 200 

JAMES  R.  WEAVER 136 

A.  LEO  WEIL 200 

HENRY  WHITE 456 

CHARLES  D.  WILLARD 136 

DUDLEY  G.  WOOTEN,  First  Vice-Chairman 40 

JOHN  I.  YELLOTT 456 


PKEFACE. 

The  discussion  of  the  general  subject  of  trusts  and  trade 
combinations  during  the  past  summer  occupied  seemingly  more 
than  any  other  the  public  mind.  The  greatest  need  in  such 
discussions  seemed,  to  use  the  happy  expression  of  Lyman 
Abbott,  to  be  light  and  not  heat.  For  the  purpose  of  eliciting 
the  fullest  possible  discussion  of  such  subjects  from  all  stand- 
points, the  Civic  Federation  of  Chicago  invited  the  Governors  of 
the  various  states  and  the  leading  commercial,  industrial  and 
labor  organizations  to  send  delegates  to  a  conference  to  be  held  in 
Chicago  from  the  13th  to  the  16th  of  September.  A  con- 
siderable number  also  of  students  of  economics  from  the  vari- 
ous colleges  and  universities  were  invited  to  give  expression 
to  their  views  upon  the  same  general  topic.  The  response  to 
this  invitation  was  gratifying,  and  a  most  able  and  intelligent 
body  of  men  from  all  parts  of  the  country  assembled  for  such 
conference.  , 

The  delegates"  appointed  by  the  governors  represented 
every  interest  in  the  respective  states,  including  congressmen,  ex- 
congressmen,  ex-governors,  ex-supreme  court  judges,  attorneys- 
general,  presidents  of  banks,  presidents  of  railroads,  manufactur- 
ing and  commercial  organizations,  and  representatives  of  labor, 
agricultural  and  educational  interests. 

In  the  arrangement  of  the  program  especial  care  was  taken 
that  every  side  of  the  general  subject  should  be  represented  in  the 
discussion  by  its  ablest  advocates. 

At  the  opening  of  the  conference  there  seemed  among  the 
delegates  to  be  a  widespread  suspicion  as  to  the  fairness  of  the 
discussions,  and  a  feeling  that  some  political  motive  might  be 


behind  the  call  for  its  assembling.  Before  the  close,  however, 
of  the  first  day's  proceedings  this  feeling  had  entirely  dis- 
appeared,' and  people  who  supposed  themselves  to  he  entirely 
antagonistic  as  to  their  aims  and  the  methods  of  obtaining  cer- 
tain ends  found  that  all  shades  of  opinion  had  much  ground 
in  common.  The  discussion  proceeded  with  an  amount  of  good 
feeling  and  friendliness  among  the  delegates  scarcely  to  have 
been  looked  for  among  men  of  such  diverse  views.  At  the  close 
of  the  conference  the  whole  body  of  delegates  seemed  to  recognize 
that  the  purpose  of  the  Civic  Federation  to  make  the  occasion 
an  educational  one  by  throwing  the  greatest  possible  light  upon 
all  phases  of  the  general  subject  had  been  accomplished. 

The  interest  on  the  part  of  the  public  grew  day  by  day  as 
the  reports  of  the  proceedings  in  the  newspapers  illustrated 
the  breadth  of  view  covered  by  the  various  speakers. 

The  desire  seemed  to  be  general  that  the  proceedings  be 
published  in  a  permanent  form  which  should  make  them  acces- 
sible to  the  larger  public  which  had  not  the  opportunity  of 
hearing  the  various  speakers.  The  debate  as  set  forth  in  the 
pages  following  gives  the  widest  view  yet  presented  of  the 
important  subjects  discussed,  and  it  is  hoped  that  it  may  reach  a 
wide  audience. 

FKANKLIN  H.  HEAD. 


PROCEEDINGS 

OF  THE 

CHICAGO  CONFERENCE  ON  TRUSTS. 


The  conference  on  "Trusts,"  called  by  the  Civic  Federation, 
was  called  to  order  in  Central  Music  Hall,  Chicago,  at  10:45 
o'clock  Wednesday  morning,  September  13,  1899,  by  President 
Franklin  H.  Head,  who  stated  the  objects  of  the  conference  as 
follows : 

FEANKLIN  H.  HEAD. 

President  The  Civic  Federation  of  Chicago. 

The  Civic  Federation  of  Chicago  is  a  non-partisan  organiza- 
tion, embracing  in  its  membership,  supporters  and  well  wishers, 
a  goodly  proportion  of  the  active  business  and  professional  men 
of  our  city;  of  the  men  who  in  their  several  ways  have  helped 
to  win  for  our  city  its  position  as  a  metropolitan  capital.  Some 
months  since  it  realized  that  no  topic  seemed  so  widely  discussed 
as  what  was  designated  by  the  general  title  of  "Trusts" — and 
that,  too,  upon  no  current  topic  was  there  so  widespread  and  gen- 
eral an  ignorance  and  confusion  of  ideas.  There  seemed  to  us  a 
crying  need  for  education  upon  the  subject;  of  an  education 
which  would  show  the  broad  distinction  between  the  various  trade 
combinations  and  trusts,  and  to  promote  such  education  this  con- 
ference is  now  in  session. 

It  is  not  a  trust  or  an  anti-trust  conference,  but  a  conference 
in  search  of  truth  and  light.  With  this  end  in  view  the  attend- 
ance has  been  solicited  of  men  of  every  shade  of  opinion  upon 
the  general  subject;  from  the  men  who  regard  trusts  and  trade 
combinations  as  the  standing  menace  to  our  national  prosperity, 
and  even  to  the  perpetuity  of  our  system  of  government,  to  those 
who  feel  that  trade  combinations  and  large  aggregations  of  active 


capital  are  simply  a  natural  evolution  in  the  development  of  our 
industrial  and  commercial  life,  and  that  such  aggregations  are 
absolutely  necessary  to  enable  us  to  compete  with  the  vast  ac- 
cumulations and  experience  of  the  older  nations,  and  their  almost 
total  control  outside  of  food  products,  of  the  markets  of  the 
world.  We  are  also  to  hear  from  those  holding  views  between 
either  extreme;  those  who  believe  in  the  value  of  combinations 
properly  organized,  but  who  recognize  in  the  reckless  and  exces- 
sive capitalization  of  many  of  such  combinations  a  peril  leading 
to  widespread  panic  and  distress  from  such  inflated  stocks  being 
absorbed  by  the  small  investors,  whose  savings  may  be  thus  in 
great  measure  lost. 

We  hope  to  hear  the  general  subject  discussed  from  all  possi- 
ble standpoints — from  the  view  not  only  of  the  organizers  of  the 
combinations,  but  also  from  the  workmen  and  customers  of  the 
industrial  corporations.  We  hope  that  light  will  be  thrown  upon 
the  difference  between  the  class  of  trusts  which  tend  to  monopolies 
and  the  industrial  combinations  which  in  many  cases  seem  to 
be  to  the  advantage  of  all. 

We  are  now  in  a  period  of  a  large  advance  in  the  prices  of 
most  classes  of  manufactured  goods,  especially  in  iron  and  steel 
products,  and  we  hope  that  some  of  our  speakers  will  illustrate 
how  much  of  this  advance  is  due  to  combinations,  and  how  much 
to  the  vastly  increased  demand,  which  in  all  lines  has  always  in 
the  past  resulted  in  advanced  prices  under  the  immutable  law 
of  supply  and  demand.  There  has  been  no  trust  or  combination, 
for  instance,  among  our  farmers,  but  we  all  recollect  how  two 
years  ago  the  short  wheat  crop  abroad  caused  such  an  increased 
demand  as  to  legitimately  advance  the  price  of  that  staple  over 
50  per  cent  within  a  period  of  four  months,  and  that  later  an 
enormous  demand  for  wheat  from  one  of  our  own  citizens,  Mr. 
Joseph  Leiter,  whose  hunger  for  wheat  gave  him  a  world-wide 
reputation,  caused  an  advance  of  another  50  per  cent. 

The  very  general  response  to  our  invitations  to  this  confer- 
ence, from  the  governors  of  nearly  all  the  states,  who  have  ap- 
pointed as  delegates  their  most  eminent  citizens — from  the  great 
commercial  bodies,  the  universities  and  the  labor,  agricultural, 
and  other  organizations  which  have  sent  their  ablest  men  and 
most  profound  students  of  economic  problems — this  response  has 
been  gratifying  beyond  measure,  and  illustrates  the  abiding  in- 
terest everywhere  felt  in  the  general  subject  and  its  impartial 
discussion.  This  response  also  fill?  us  with  hope  as  to  the  great 
advantages  which  will  result  from  the  full  discussion  of  all  phases 
of  the  most  vital  topic  of  the  day. 


We  trust  that  this  discussion  may  be  able,  scholarly  and  dig- 
nified, as  becomes  the  subjects  and  the  occasion,  and  that  when 
these  discussions  reach  their  proper  audience — the  millions  of 
people  in  every  town  and  hamlet  who  from  the  newspapers  re- 
ceive the  reports  of  your  deliberations,  it  may  lead  to  such  action 
at:  may  tend  to  preserve  in  our  trade  combinations  all  which  is  of 
value,  as  well  as  to  point  out  methods  by  which  the  evils  of  such 
combinations  may  be  avoided  or  done  away. 

The  Civic  Federation  recognizes  also  that  with  the  assembling 
oi'  the  delegates  to  this  conference  and  its  brief  preliminary  exer- 
cises, its  participation  in  your  proceedings  is  at  an  end.  You 
will,  gentlemen,  make  your  own  program  and  plans — at  the  same 
time  I  wish  to  tender  to  you  on  the  part  of  the  Federation,  with 
its  best  wishes,  the  services  of  any  of  its  committees,  officers  or 
members,  whenever  such  services  can  in  any  way  facilitate  your 
work. 

EDWARD  C.  AKIN. 

Attorney-General  of  Illinois. 

Representing  Governor  John  R.  Tanner,  Attorney-General 
Akin,  on  behalf  of  the  State  of  Illinois,  welcomed  the  delegates 
to  the  convention.  Mr.  Akin  said: 

The  pleasure  of  addressing  you  on  this  occasion  is  as  gratify- 
ing as  it  is  unexpected,  and  the  fact  that  the  substitutions  were 
announced  long  before  either  Governor  Tanner  or  myself  knew 
of  any  such  purpose,  is  but  a  deserved  compliment  to  the  energy 
and  prophetic  power  of  the  average  Chicago  newspaper  reporter. 

Owing  to  the  serious  illness  of  Governor  Tanner,  which  alone 
prevents  his  presence  here  to-day,  the  privilege  of  welcoming 
you  on  this  occasion  has  been  generously  accorded  to  me.  The 
casual  stranger,  who  comes  without  evil  intent,  is  entitled  to 
passive  welcome  as  a  matter  of  mere  courtesy,  but  to  you  a  most 
generous  welcome  is  due,  because  many  of  you  occupy  positions  of 
high  trust  and  importance  in  the  various  states  you  represent,  be- 
cause among  you  are  the  leading  minds  of  the  great  world  of  let- 
ters and  of  science.  You  are  entitled  to  welcome,  not  alone  be- 
cause of  these,  but  because  of  the  objects  and  the  purposes  that 
have  brought  you  together.  The  chief  end  of  government  is 
the  accomplishment  of  the  greatest  good  to  the  greatest  num- 
ber. Whether  that  great  evolution  of  modern  trade  and  com- 
merce, commonly  known  as  the  trust,  is  to  prove  of  benefit 


<>r  injury  to  the  masses  of  our  people,  and  if  of  benefit,  how  it 
may  safely  be  promoted,  and  it'  of  injury,  what  the  remedy  shall 
be,  how  and  by  what  authority  applied,  are  questions  that  lie 
close  to  the  well-being  and  happiness  of  our  people,  and  in  which 
they  are  to-day  above  all  other  matters  vitally  interested.  . 

The  personnel  of  this  conference  is  guarantee  that  these  great 
questions  will  not  only  be  ably  discussed,  but  along  educational, 
conservative  lines,  which  are  the  underlying  principles  of  this  con- 
ference, and  it  is  because  of  the  courtesy  ordinarily  due  to  stran- 
gers within  our  gates,  and  is  due  also  because  of  high  considera- 
tions of  personal  regard;  it  is  because  of  the  prominence  which 
you  have  attained  in  the  public  estimation;  it  is  because  of  the 
purposes  and  objects  that  have  brought  you  together;  and  it  is 
because  we  believe  that  as  a  result  of  this  conference  our  people 
will  have  a  better  and  a  wider  knowledge  of  these  great  ques- 
tions, and  that  here  will  be  sown  the  seed  which  shall  blossom 
into  legislation,  if  legislation  be  needed,  at  once  wise  and  con- 
servative, having  in  view  alike  the  interests  of  capital  and  of 
labor,  of  the  consumer  and  the  producer. 

It  is  because  of  all  these  that  on  behalf  of  the  great  state  of 
Illinois  and  on  behalf  of  its  governor,  I  extend  to  you  a  hearty 
and  cordial  welcome. 

HOWAKD  S.  TAYLOR 

Prosecuting  Attorney,  City  of  Chicago. 

On  behalf  of  the  City  of  Chicago,  and  speaking  for  Mayor 
Carter  H.  Harrison,  City  Prosecutor  Howard  S.  Taylor  extended 
a  welcome  to  the  delegates  to  the  city,  saying: 

I  am  requested  by  His  Honor,  the  Mayor,  now  absent  from 
the  city,  to  be  present  on  this  occasion  and  in  his 
name  to  bid  you  a  most  hearty  welcome  to  Chicago,  with 
the  assurance  that  this  great  'Aty,  whose  motto  is  "I  Will," 
shrinks  from  no  problem,  but  with  the  characteristic 
intelligence  and  liberality  that  from  old  Fort  Dearborn 
till  now  has  always  distinguished  her  welcomes  into  her  forum 
with  perfect  confidence  every  free  utterance  and  inquiry  that  may 
give  inspiration  and  wisdom  to  the  great  republic  of  which  we 
are  a  constituent  pajt.  Chicago,  through  all  her  history,  has 
believed  that  there  is  more  danger  in  suppressing  truth  than  in 
publishing  falsehood;  and,  therefore,  she  clings  to  the  old  doc- 
trine of  free  and  full  speech  on  every  question  of  public  interest. 

10 


The  matter  that  has  brought  you  together  is  of  prime  im- 
portance to  Chicago  and  to  the  whole  country.  We  are  a  nation 
of  wealth  producers  and  distributors.  We  can  fight  if  need  be — 
from  Washington  down  to  Miles,  from  John  Paul  Jones  to  Ad- 
miral Dewey,  we  have  no  apologies  to  make  for  our  conduct  on 
land  or  sea.  We  have  also  contributed  our  full  quota  to  the 
world's  treasury  of  literature  and  art;  but,  after  all,  Providence 
and  the  genius  of  our  people  have,  in  the  main,  led  us  in  the 
ways  of  peace  and  production.  To  challenge  nature,  to  wring 
from  her  strongholds  the  material  gains  that  shall  make  us  a 
people  of  happy  homes  and  hopeful  hearts,  has  been  the  history 
of  our  honorable  past  and  the  prophecy  of  our  .growing  future. 
Whatever,  therefore,  touches  the  question  of  wealth  production, 
and  distribution  touches  the  center  of  our  civilization  and  invites 
from  all  our  people  such  counsel  and  action  as  shall  secure  for  us 
and  our  posterity  the  greatest  possible  good — that  benevolent 
reign  of  peaceful  industry  that  shall 

" — Scatter  plenty  o'er  a  smiling  land 
And  read  its  history  in  a  nation's  eyes." 

That  the  subject  which  you  are  to  discuss  is  one  both  of  em- 
inence and  imminence  is  proven  not  only  by  your  presence  here, 
but  by  the  wide  discussion  which  is  now  going  on  in  the  maga- 
zines and  newspapers  and  in  every  other  place  where  public 
opinion  is  created  or  expressed.  Gentlemen  may  differ  in  their 
opinions  concerning  the  nature  of  trusts,  their  cause  and  cure; 
but  there  is  no  questioning  the  fact  that  a  new  and  portentous 
phenomenon  has  risen  above  the  horizon  of  our  national  life,  and 
one  of  such  grave  import  as  to  justify  the  fullest,  fairest  study 
that  this  convention  can  command. 

His  Honor,  Mayor  Harrison,  has  his  views  upon  this  subject — 
clear  and  pronounced;  but  he  entertains  them  as  an  American 
citizen,  and  will  not  take  advantage  of  his  official  position  to 
promulgate  them.  As  chief  magistrate  of  the  city,  he  does  not 
desire  to  bias  nor  anticipate  your  conclusions;  but,  confident 
always  in  truth  as  an  end  and  free  speech  as  a  means,  he  approves 
your  convention  and  bids  you,  through  me,  a  most  cordial  wel- 
come to  Chicago. 

Attorney-General  T.  S.  Smith,  of  Texas,  moved  that  Frank- 
lin H.  Head  and  Ralph  M.  Easley,  respectively  president  and 
secretary  of  the  Civic  Federation  of  Chicago,  be  made  the  tempo- 
rary officers  of  the  conference,  and  that  the  Civic  Federation  be 

11 


requested  to  furnish  the  program  for  the  first  day,  or  pending 
the  formation  of  the  permanent  organization.  This  was  sec- 
onded by  Congressman  E.  D.  Sutherland,  of  Nebraska,  and  was 
unanimously  carried. 

Yellott,  of  Maryland,  introduced  the  following  resolution: 

RESOLVED,  That  a  committee  on  organization  and  program, 
composed  of  one  delegate  from  each  state  and  each  organization 
represented  by  invitation  of  the  Civic  Federation,  of  Chicago, 
be  appointed  by  such  delegation  to  have  charge  of  the  proceed- 
ings of  this  conference,  and  report  on  the  order  of  proceedings 
that  shall  govern  the  same.  That  the  permanent  chairman  of 
this  meeting  shall  act  in  concert  with  such  committee,  and  he, 
together  with  the  committee,  shall  determine  what  papers  shall 
be  read  and  what  lines  of  discussion  shall  be  allowed. 

Rosewater,  of  Nebraska,  raised  a  point  of  order,  demanding 
that  a  list  of  delegates  be  read  and  credentials  be  in  some  manner 
passed  upon.  This  was  received  with  applause,  but  a  general 
discussion  of  considerable  warmth  ensued.  The  point  of  order 
was  sustained,  and  Secretary  Easley  read  the  list  of  delegates 
appointed,  and  after  several  minor  corrections  it  was  declared  the 
official  roll. 

APPOINTED  BY  GOVERNOR  JOHNSTON,  OF  ALABAMA. 

Eyre  Damar,  Mobile.  Wallace  Haralson,  Ft.  Payne. 

Gordon   McDonald,    Montgomery.  E.  M.  Ragland,  Tuscumbia. 

Reed  B.  Barnes,  Opelika.  B.  B.  Comer,  Birmingham. 
W.  W.  Quarles,  Selma. 

APPOINTED   BY  GOVERNOR  MURPHY,   OF  ARIZONA. 

M.  J.  Egan,  Clifton.  E.  M.  Does,  Flagstaff. 

C.  W.  Wright,  Tucson.  J.  C.  Adams,  Phoenix. 

W.  H.  Barnes,  Tucson.  John  M.  Hamilton,  Chicago. 

APPOINTED  BY  GOVERNOR  THOMAS,  OF  COLORADO. 

Thos.  M.  Patterson,  Denver.  Alva  Adams,  Pueblo. 

T.  S.  McMurray,  Denver.  H.     H.     Seldomridge,     Colorado 

H.  V.  Johnson,  Denver.  Springs. 

Mrs.  Sarah  S.  Platt,  Denver.  Jas.  W.  Bucklin,  Grand  Junction. 


12 


APPOINTED  B¥  J.  M.  HUGHES,  SECRETARY  OF  STATE, 

DELAWARE. 


John  H.  Rodney,  Wilmington. 
William  S.  Hilles,  Wilmington. 
John  W.  Causey,  Milford. 
Henry  Allaway,  Dover. 
James  L.  Wolcott,  Dover. 


John  H.  Hoffecker,  Smyrna. 
Charles  M.  Cullen,  Georgetown. 
Chas.  F.  Richards,  Georgetown. 
James  Ross,  Seaford. 


APPOINTED  BY  GOVERNOR  TANNER,  OF  ILLINOIS. 


Shelby  M.  Cullom,  Springfield. 
David  Ross,  Springfield. 
Charles  A.   Hill,   Springfield. 
Lloyd  F.  Hamilton,  Springfield. 
Wm.  E.  Mason,  Chicago. 
Horatio  W.  Seymour,  Chicago. 
Geo.  W.  Hinman,  Chicago. 
R.  W.  Patterson,  Chicago. 
James  H.  Eckels,  Chicago. 
E.  S.  Lacey,  Chicago. 
George  B.  Swift,  Chicago. 
John  A.  Roche,  Chicago. 
John  P.  Hopkins,  Chicago. 
George  A.  Schilling,  Chicago. 
Clarence  S.  Darrow,  Chicago. 
Theodore  Brentano,  Chicago. 
L.  C.  Collins,  Chicago. 
John  M.  Smyth,  Chicago. 
John  W.  Gates,  Chicago. 


George  R.  Peck,  Chicago. 
J.  Ogden  Armour,  Chicago. 
H.  B.  Wicker  sham,  Chicago. 
John  F.  Scanlan,  Chicago. 
Frank  F.  Holmes,  Chicago. 
John  E.  Enander,  Chicago. 
Joseph  W.  Fifer,  Bloomingtpn. 
Adlai  E.  Stevenson,  Bloomington. 
Charles  H.  Deere,  Rock  Island. 
W.  F.  Eastman,  Moline. 
W.  R.  Jewell,  Danville. 
John  W.  Fornof,  Streator. 
S.  M.  Dalzell,  Spring  Valley. 
Perry  C.  Ellis,  Quincy. 
Charles  Voris,  Windsor. 
William  P.  Halliday,  Cairo.  (Since 

deceased.) 

Charles  B.  Cole,  Chester. 
Homer  Tice,  Greenview. 


APPOINTED  BY  GOVERNOR  MOUNT,   OF  INDIANA. 


Solon  L.  Goode,  Indianapolis. 
Allen  W.  Clark,  Greensburg. 
E.  B.  Martindale,  Indianapolis. 
John  B.  Stoll,  South  Bend. 
R.  S.  Taylor,  Fort  Wayne. 
Josiah  Gwin,  New  Albany. 
Aaron  Jones,  South  Bend. 
John  W.  Spencer,  Evansville. 
Goodlet  Morgan,  Petersburg. 
Jos.  Swain,  Bloomington. 
Leonard  J.   Hackney,    Shelbyville. 
Wm.  H.    O'Brien,  Lawrenceburg. 
Isaac  H.  Strouse,  Rockville. 


William     Dudley     Foulke,     Ricn- 

mond. 

Daniel  P.  Irwin,  Indianapolis. 
Wm.  H.  Eichhorn,  Bluffton. 
A.  M.  Scott,  Ladoga. 
A.  L.  Kumler,  La  Fayette. 
M.  Winfield,  Logansport. 
J.  N.  Bahcock,  Topeka. 
A.  P.  Kent,  Elkhart. 
John  B.  Conner,  Indianapolis. 
Amos  W.  Reagan,  Indianapolis. 
George  W.  Geiger,  Indianapolis. 
Charles  M.  Walter,  Rossville. 


APPOINTED  BY  GOVERNOR  MAYES,  CHEROKEE  NATION, 
INDIAN  TERRITORY. 


James  S.  Stapler.  Tahlequah. 
Joe  M.  Lahay,  Claremore. 
James  S.  Davenport.  Vinita. 
W.  W.   Hastings,  Tahlequah. 


Charles  O.  Frye,  Sullisuw. 

John   C.   Dannenburg,   Tahlequah. 

F.  H.  Nash,  Ft.  Gibson. 


APPOINTED  BY  GOVERNOR  SHAW,  OF  I0\\  \. 

James  G.  Berryhill,  DCS  Moines.  Anihros    P.   McGuirk,    Davenport. 

George  E.  Clarke,  Algona.  Paul  MacLean,  Creston. 

Thomas  Updegraff.  McGregor.  Edward  H.  Thayer,  Clinton. 

W.  R.  Green.  Audubon.  Cato  Sells,  Vinton. 

Robert  H.  Moore,  Ottumwa.  John  J.  Hamilton,  Des  Moines. 
John  Story,  Lake  Mills. 

APPOINTED  BY  GOVERNOR  STANLEY,  OF  KANSAS. 

I 

W.  J.  Bailey,  Baileyville.  Harry  L.  Pestana,  Russell. 

George  H.  Buckman.  Winfield.  Charles  E.  Elliott,  Wellington. 

W.  A.  White,  Emporia.  C.  Wood  Davis,  Peotone. 

John  E.  Hessin,  Manhattan.  J.  K.  Cubbison,  Kansas  City,  Mo. 

APPOINTED  BY  GOVERNOR  BRADLEY,  OF  KENTUCKY. 

W.    C.    P.    Breckenridge,    Lexing-  William  Lindsay,   Frankfort. 

ton.  W.  H.  Holt.  Frankfort. 

P.  W-  Hardin,  Harrodsburg.  W.  P.  Kimball,  Lexington. 

John  W.  Lewis,  Springfield.  John  W.  Yerkes.  Danville. 

APPOINTED  BY  GOVERNOR  POWERS,  OF  MAINE. 

Henry  B.  Cleaves,  Portland.  S.  D.  Leavitt.  Eastport. 

A.  H.  Gardner.  Rockland.  .  Henry  C.  Emery,  Brunswick. 

Nathaniel  Butler.  Waterville.  Wm.  H.  Newell.  Lewiston. 

J.  P.  Bass,  Bangor.  Cyrus  H.  Blanchard,  Wilton. 

Chas.  H.  Prescott,  Biddeford.  Victor  W.  McFarlane,  Greenville. 

APPOINTED    BY    GOVERNOR  LOWNDES,    OF    MARYLAND. 

Charles  J.  Bonaparte,  Baltimore.  Ben}.  F.  Newcomer,  Baltimore. 

Wm.  T.  Dixon,  Baltimore.  Stevenson  A.  Williams.  Bel  Air. 

John  K.  Cowen.  Baltimore.  Herbert  B.  Adams,  Baltimore. 

Felix  Agnus,  Baltimore.  John  I.  Yellott,  Towson. 

APPOINTED  BY   GOVERNOR   PINGREE,   OF  MICHIGAN. 

Russell  A.  Alger,  Detroit.  George  B.  Horton,  Fruit  Ridge. 

J.  N.-Klock,  Benton  Harbor.  L.  D.  Watkins,  Manchester. 

J.  W.  Hannen,  Traverse  City.  Fred  A.  Maynard,  Grand  Rapids. 

George      W.      McBride,      Grand  Edwin  Henderson.  Detroit. 

Haven.  E.  C.  Davidson.  Escanaba. 

William  H.  Lockerby,  Quincy.  Phil  B.  Kirkwood.  Negaunee. 

Fred  Stone,  Hillsdale.  Elliott  G.  Stevenson,  Detroit. 

Cyrus  G.  Luce.  Coldwater.  Henry  C.  Adams,  Ann  Arbor. 
A.  P.  Greene,  Eaton  Rapids. 

APPOINTED  BY  GOVERNOR  STEPHENS,  OF  MISSOURI. 

F.  M.  Cockrell,  Warrensburg.  L.  A.  Vories,  St.  Joseph. 

E.  C.  Crow.  Jefferson  City.  C.  C.  Fuller,  Mound  City. 
Joseph  A.  Graham,  St.  Louis.  Frank  P.  Sebree,  Kansas  City. 
Alexander  G.  Cochran,  St.  Louis.  F.  C.  Farr,  Kansas  City. 
David  R.  Francis,  St.  Louis.  John  S.  Haymes,  Buffalo. 

F.  W.  Lehmann,  St.  Louis.  L.  F.  Cotty,  Edina. 
Emil  Pretorius.  St.  Louis.  Marsh  Arnold,  Benton. 
John  A.  Hockaday,  Fulton.  N.  O.  Nelson. 

W 


APPOINTED   BY   GOVERNOR   McLAURIN,   OF   MISSISSIPPI. 

J.  W.  Cutrer,  Clarksdale.  S.  S.  Calhoon,  Jackson. 

John     Sharpe     Williams,  Yazoo      A.  H.  Whitfield,  Jackson. 
City.  Henry  Christmas,  Tchula. 

Frank  Burkitt,  Okolona.  E.  H.  Moore,  Rosedale. 

APPOINTED  BY  GOVERNOR  SMITH,  OF  MONTANA. 

Martin  Maginnis,  Helena.  J.  E.  Rickards.  Butte. 

J.  K.  Toole,  Helena.  H.  H.  Swain.  Dillon. 

Chas.  S.  Hartman,  Bozeman.  W.  F.  Sanders,  Helena. 
A.  J.  Campbell,  Butte. 

APPOINTED  BY  GOVERNOR  POYNTER,  OF  NEBRASKA. 

Edward  Rosewater.  Omaha.  William  Jennings  Bryan,  Lincoln. 

Lorenzo  Crounse,  Calhoun.  A.  H.  Hippie,  Omaha. 

William  V.  Allen,  Madison.  Frank  T.  Ransom,  Omaha. 
R.  D.  Sutherland,  Nelson. 

APPOINTED  BY  GOVERNOR  ROLLINS,  OF  NEW  HAMP- 
SHIRE. 

Henry  *W.  Blair,  Manchester.  Chas.  H.  Sawyer,  Dover. 

John  P.  George,  Concord.  Edward  H.  Wason,  Nashua. 

H.  B.  Viall,  Keene.  Dorrance  B.  Currier,  Hanover. 
J.  W.  Remick,  Littleton. 

APPOINTED  BY   GOVERNOR  'VOORHEES,   OF  NEW 
JERSEY. 

S.  H.  Grey,  Trenton.  Henry  H.  Isham,  Elizabeth. 

Eugene  Stevenson,  Paterson.  Allan  L.  McDermott. 

Edward  Q.  Keasbey,  Newark. 

APPOINTED  BY  GOVERNOR  OTERO,  OF  NEW  MEXICO. 

frank  Springer,  East  Las  Vegas.  A.  R.  Graham.  Hudson. 

Frank  A.   Manzanares,    East   Las  J.  W.  Dwyer,  Raton. 

Vegas.  E.  V.  Chavez.  Albuquerque. 

Thomas  D.  Burns.  Parkview.  C.  J.  Gavin,  Raton. 

Anthony  Joseph,  Ojo  Caliente.  Albert  Lawrence,  Catskill. 

APPOINTED  BY  GOVERNOR  ROOSEVELT,  OF  NEW  YORK. 

Chauncey  M.   Depew,   New  York  Henry  White,  New  York  City. 

City.  Stephen  P.  Corliss,  Albany. 

John  G.  Carlisle,  New  York  City.  John  McMackin.  Albany. 

W.   Bounce  Cockran,    New   York  John  B.  Clark,  New  York  City. 

City.  Jacob  G.  Schurman,  Ithaca. 

Albert  Shaw,  New  York  City.  Robert  B.  Adam.  Buffalo. 

George  Gunton,  New  York  City.  Thos.  M.  Osborne.  Auburn. 

Francis    B.    Thurber,    New    York  George  E.  Green,  Binghamton. 

City. 

15 


APPOINTED  BY  GOVERNOR  FANCHER,  OF  NORTH 
DAKOTA. 

David  Morgan,  Devils  Lake.  John  M.  Cochrane,  Grand  Forks. 

James  D.  Benton,  Fargo.  David  Bartlett,  Cooperstown. 

M.  H.  Jewell,  Bismarck.  David  Wellman,  New  Rockford. 

A.  W.  Edwards,  Fargo.  Wm.  T.  Perkins. 
Roderick  Rose,  Jamestown. 

APPOINTED  BY  GOVERNOR  BUSHNELL,  OF  OHIO. 

John  Sherman,  Mansfield.  F.  S.  Monnett,  Columbus. 

J.  B.  Foraker,  Cincinnati.  Jas.  E.  Neal,  Hamilton. 

Charles  Foster,  Fostoria.  C.  L.  Kurtz,  Columbus. 

M.  E.  Ingalls,  Cincinnati.  Selwyn  N.  Owen,  Columbus. 

Asa  W.  Jones,  Youngstown.  I.  F.  Mack.  Sandusky. 
Washington  Gladden,  Columbus.          R.  E.  McKisson,  Cleveland. 

Paul  J.  Sorg,  Middletown.  John  P.  Jones,  Columbus. 

APPOINTED  BY  GOVERNOR  GEER,  OF  OREGON. 

M.  C.  George,  Portland.  B.  F.  Alley,  Baker  City. 

Sylvester  Pennoyer,  Portland.  Walter  L.  Tooze,  Woodburn. 

C.  W.  Fulton,  Astoria.  Wm.  Colvig,  Jacksonville. 
M.  A.  Miller,  Lebanon. 

APPOINTED  BY   GOVERNOR   STONE,   OF  PENNSYLVANIA. 

M.  M.  Garland,  Pittsburg.  Lyman  D.  Gilbert.  Harrisburg. 

W.  P.  Potter,  Pittsburg.  A.  Louden  Snowden,  Philadelphia. 

Joseph  N.  Pew,  Pittsburg.  H.  W.  Palmer,  Wilkes  Barre. 

Wm.  C.  Bullitt,  Philadelphia.  A.  Leo  Weil,  Pittsburg. 

APPOINTED  BY  GOVERNOR  ELLERBEE,  OF  SOUTH 
CAROLINA. 

J.  H.  Marshall,  Charleston.  J.  S.  Brice,  Yorkville. 

L.  W.  Youmans,  Fairfax.  A.  H.  Williams,  Lake  City. 

J.  E.  Boggs,  Pickens.  S.  H.  Rodgers,  Port  Royal. 

T.  L.  Gantt,  Spartanburg.  A.  C.  Kaufman,  Charleston. 

APPOINTED  BY  GOVERNOR  LEE,  OF  SOUTH  DAKOTA. 

R.  F.  Pettigrew,  Sioux  Falls.  Freeman  Knowles,  Deadwood. 

\V.  T.  La  Follette  Chamberlain.  M.  S.  Sheldon,  Watertown. 

John  E.  Kelley,  Flandreau.  W.  E.  Kidd,  Aberdeen. 

S.  H.  Wright,  Chamberlain.  Chauncey  L.  Wood,  Rapid  City. 

APPOINTED   BY   GOVERNOR   McMILLEN,   OF   TENNESSEE. 

C.  E.  Snodgrass,  Crossville.  T.  W.  Sims,  Linden. 

John  W.  Gaines,  Nashville.  Rice  A.  Pierce,  Union  City. 

J.  D.  Richardson,  Murfreesboro.  E.  W.  Carmack,  Memphis. 
N.  N.  Cox,  Franklin. 

16 


APPOINTED  BY  GOVERNOR  SAVERS,  OF  TEXAS. 

T.  S.  Smith,  Austin.  W.  T.  Burns,  Houston. 

Cecil  Smith,  Sherman.  E.  R.  McLean,  Austin. 

Dudley  G.  Wooten,  Dallas.  Eugene  Williams,  Waco. 

L.  J.  Wortham,  Austin.  W.  L.  Grogan,  Sweetwater. 

R.  E.  Prince,  Corsicana.  E.  B.  Perkins,  Dallas. 

A.  B.  Davidson,  Cuero.  E.  P.  Curtis,  Temple. 

APPOINTED   BY   GOVERNOR  WELLS,   OF  UTAH. 

Geo.  W.  Bartch,  Salt  Lake  City.  C.  C.  Richards,  Ogden. 

Jos.  L.  Rawlins,  Salt  Lake  City.  Lafayette  Holbrook,  Provo. 

Geo.  C.  Cannon,  Salt  Lake  City.  D.  O.  Rideout,  Draper. 

APPOINTED   BY   GOVERNOR  ATKINSON,   OF  WEST 
VIRGINIA. 

Randolph  Stalnaker,  Wheeling.  I.  Schwabe,  Charleston. 

W.  B.  McMechen,  Wheeling.  E.  C.  Gerwig,  Parkersburg. 

Philip  C.  Adams,  Sutton.  E.  Tracey  Tobin,  Philadelphia,  Pa. 

E.  S.  Hutchinson,  Maybeury.  W.  A.  McCorkle,  Charleston. 
R.  B.  Cassiday,  Charleston.  John  W.  Harris,  Lewisburg. 

J.  W.  Roche,  Charleston.  Daniel  B.  Lucas,  Charles  Town. 

James  R.  Smoot,  Newberg.  John  W.  Mason,  Fairmount. 

S.  H.  Gramm,  Grafton.  John  Brannon,  Weston. 

Samuel  Dixon,  Macdonald.  F.  J.  Hearne,  Wheeling. 

Hullihen  Quarrier,  Wheeling.  Z.  T.  Vinson,  Huntington. 
Darwin  E.  Abbott,  Huntington.  , 

APPOINTED  BY  GOVERNOR  SCOFIELD,  OF  WISCONSIN. 

John  C.  Spooner,  Madison.  A.  M.  Jones,  Waukesha. 

Wm.  J.  Anderson,  West  Superior.  Thomas    M.    Blackstock,    Sheboy- 

John  V.  Quarles,  Milwaukee.  gan. 

Madison  Halford  Erickson,  West  George  F.  Merrill,  Ashland. 

Superior.  John  Hicks,  Oshkosh. 

J.  J.  Jenkins,  Chippewa  Falls.  John  Nagle,  Manitowoc. 

S.  S.  Barney,  West  Bend.  E.  T.  Wheelock,  Wausau. 

Wm.  F.  Vilas,  Madison.  J.  G.  Monahan,  Darlington. 

Edward  S.  Bragg,  Fond  du  Lac.  Ellis  B.  Usher,  La  Crosse. 

John  M.  Whitehead,  Janesville.  Emil  Baench,  Manitowoc. 

APPOINTED  BY  GOVERNOR  RICHARDS,  OF  WYOMING. 

F.  W.  Mondell,  Newcastle.  Andrew  McMicken,  Rawlins. 

B.  B.  Brooks,  Casper.  J.  Dana  Adams,  Sheridan. 

C.  P.  Arnold,  Laramie.  Robert  Hinton,  Evanston. 
R.  W.  Breckens,  Cheyenne. 

GOVERNORS. 

G.  W.  Atkinson,  West  Virginia.  L.  M.  Shaw,  Iowa. 

W.  E.  Stanley,  Kansas.  H.  S.  Pingree,  Michigan. 

R.  B.  Smith,  Montana.  J.  R.  Tanner,  Illinois. 

Charles  S.  Thomas,  Colorado.  L.  V.  Stephens,  Missouri. 

W.  A.  Poynter,  Nebraska.  Edward  Scofield,  Wisconsin. 

F.  B.  Fancher,  North  Dakota.  J.  A.  Mount,  Indiana. 

17 


ATTORNEYS-GENERAL. 

Wm.  L.  Taylor,  Indiana.  John  C.  Davies,  New  York. 

E.  R.  Hicks,  Wisconsin.  J.  A.  Van  Orsdel,  Wyoming. 

G.  R.  Gaither,  Jr.,  Maryland.  W.  B.  Lamar,  Florida. 

C.  J.  Smyth,  Nebraska.  A.  C.  Bishop,  Utah. 

E.  C.  Crow,  Missouri.  T.  S.  Smith,  Texas. 

A.  A.  Godard,  Kansas.  Jefferson  Davis,  Arkansas. 

E.  P.  Rucker,  West  Virginia.  Horace  M.  Oren,  Michigan. 

C.  B.  Nolan,  Montana.  Milton  Remley,  Iowa. 
W.  B.  Douglas,  Minnesota. 

CONGRESSMEN  NOT  ON  DELEGATIONS. 

D.  B.  Henderson,  Dubuque,  la.  John  A.  T.  Hull,  Des  Moines,  la. 
Vespasian  Warner,  Clinton,  la.  R.  R.  Hitt,  Mount  Morris,  111. 
James  H.  Lewis,  Seattle,  Wash.  J.  A.  Tawney,  Winona,  Minn. 
George    W.    Taylor,     Demopolis,  J.  H.  Davidson,  Oshkosh,  Wis. 

Ala.  George  W.  Prince,  Galesburg,  111. 

H.  A.  Cooper,  Racine,  Wis.  E.  L.  Hamilton,  Niles,  Mich. 

Francis  G.  Newlands,  Reno,  Nev.  Walter  Reeves,  Streator,  111. 

James  S.  Sherman,  Utica,  N.  Y.  Theodore  Otjen,  Milwaukee,  Wis. 

L.  F.  Livingstone,  Atlanta,  Ga.  Charles  Dick,  Columbus,  O. 

S.  W.  Smith,  Pontiac,  Mich.  A.  J.  Hopkins,  Aurora,  111. 

E.  D.    Crumpacker,     Valparaiso,  D.  Meekison,  Napoleon,  O. 
Ind.  J.  P.  Dolliver,  Fort  Dodge,  la. 

George  W.  White,  Tarboro,  N.  C.       James  R.  Mann,  Chicago,  111. 
D.  S.  Alexander,  Buffalo,  N.  Y. 

MILLERS'   NATIONAL  ASSOCIATION. 

Frank  Barry,   Secretary,  Milwau-       B.  A.  Eckhart,  Chicago,  111. 
kee,  Wis. 

BRICKLAYERS'    AND    MASONS'    INTERNATIONAL    UNION 
OF  AMERICA. 

M.  R.  Grady,  Chicago,  111. 

NATIONAL   GRANGE    PATRONS   OF   HUSBANDRY. 

George   B.    Horton,    Fruit   Ridge,       H.  E.  Huxley,  Neenah,  Wis. 

Mich.  C.  O.  Ranie,  Benjamin,  Mo. 

Oliver  Wilson,  Magnolia,  111.  S.  H.  Ellis,  Waynesville,  O. 

COMMERCIAL  TRAVELERS'   NATIONAL  LEAGUE. 
P.  E.  Dowe,  President,  Bedford  ^Park,  New  York  City. 

NEW  ENGLAND  FREE  TRADE  LEAGUE. 
Byron  W.  Holt,  New  York  City. 

COMMERCIAL  CLUB  OF  TOPEKA. 
George  W.  Crane,  Topeka,  Kan. 

18 


ORDER  OF  RAILROAD  CONDUCTORS. 

E.    E.    Clark,    G.    C.    C.,    Cedar      W.  D.  Anderson,  Associate  Editor 
Rapids,  la.  Official  Organ,  Order  of  R.  R. 

A.  B.  Garretson,  Assistant  Grand          Conductors,  Cedar  Rapids,  la. 
Chief  Conductor,  Cedar  Rapids, 
Iowa. 

LITTLE  ROCK  BOARD  OF  TRADE. 

LITTLE   ROCK,   ARK. 

U.  M.  Rose.  Chas.  T.  Abies. 

S.  R.  Cockrill.  W.  S.  Holt. 

John  F.  Fletcher.  H.  L.  Remmel. 

John  M.  Moore.  W.  J.  Thompson. 

Edward  Fitzgerald.  Morris  M.  Cohn. 

Charles  F.  Penzel.  George  R.  Brown. 

T.  H.  Bunch.  B.  J.  Brown. 
Herman  Hahn. 

INTERNATIONAL  ASSOCIATION  OF  MACHINISTS. 
James  O'Connell,  Washington,  D.C.      George  Preston,  Washington,  D.C. 

THE     NATIONAL     ASSOCIATION     OF    AGRICULTURAL 

.      IMPLEMENT  AND  VEHICLE  MANUFACTURERS. 
H.  C.  Staver,  Chicago,  111. 

COMMERCIAL   CLUB   OF  TERRE  HAUTE. 

TERRE   HAUTE,   IND. 

W.  C.  Ball.  J.  C.  Kolsem. 

Adolph  Herz,  Charles  H.  Ehrman. 

J.  Smith  Talley. 

ORDER  KNIGHTS  OF  LABOR. 

J.  G.  Schonfarber,  Baltimore.  Md.       August  E.  Cans,  Chicago,  111. 
I.  D.  Chamberlain,  Pueblo,  Col.       .    E.  J.  Lindholm,  Chicago,  111. 
John   W.    Hayes,    General    Secre- 
tary, Washington,  D.  C. 

NEW  YORK  BOARD  OF  TRADE  AND  TRANSPORTATION. 

W.   H.   Parsons,    President,    New       Charles  A.  Schieren,  Brooklyn. 
York  City.  John   H.   Washburne,   New  York 

G.  Waldo  Smith.  New  York  City.  City. 

S.  A.  Robinson,  West  New  Brigh- 
ton, Staten  Island,  N.  Y. 

NEW  ORLEANS  BOARD  OF  TRADE. 
W.  W.  Howe,  New  Orleans,  La. 

ST.  LOUIS  TRAFFIC  BUREAU. 

A.  J.  Vandlandingham,  Commissioner,  St.  Louis,  Mo. 

19 


THE  MERCHANTS'  AND  MANUFACTURERS'  ASSOCIATION, 
MILWAUKEE,  WIS. 


A.  K.  Hamilton. 
G.  G.  Pabst. 
O.  C.  Fuller. 


E.  P.  Hackett. 
B.  Leidersdorf. 


WISCONSIN   STATE   GRANGE   PATRONS   OF   HUSBANDRY. 
S.  C.  Carr,  Milton  Junction,  Wis. 

AMERICAN  FEDERATION  OF  LABOR. 
Samuel  Gompers,  Washington,  D.  C. 

CHAMBER  OF  COMMERCE,  LOS  ANGELES,  CAL. 
C.  D.  Willard. 

INTERNATIONAL  TYPOGRAPHICAL  UNION. 
Samuel  B.  Donnelly,  President,  Indianapolis,  Ind. 

CHAMBER  OF  COMMERCE,  NEW  HAVEN,  CONN. 
Max  Adler,  President. 

COLLEGE  REPRESENTATIVES. 


J.  W.  Jenks,  Cornell  University, 
Ithaca,  N.  Y. 

Wm.  F.  King,  President  Cornell 
College,  Mt.  Vernon,  la. 

R.  I.  Holaind,  Georgetown  Col- 
lege, Washington,  D.  C. 

S.  A.  Martin,  President  Wilson 
College,  Chambersburg,  Pa. 

Charles  F.  Thwing,  President 
Western  Reserve  University, 
Adelbert  College,  Cleveland,  6. 

David  Kinley,  University  of  Illi- 
nois, Urbana,  111. 

Frank  W.  Taussig,  Harvard  Uni- 
versity, Cambridge,  Miss. 

George  A.  Gates,  President  Iowa 
College,  Grinnell,  la. 

Robt.  B.  Robinson,  The  John  Hay 
Normal  and  Industrial  School, 
Alexandria,  Va. 

J.  H.  Kirkland,  Chancellor  Van- 
derbilt  University,  Nashville, 
Tenn. 

Isaac  Althaus  Loos,  Prof.  Political 
Science,  University  of  Iowa, 
Iowa  City,  la. 


Wm.  J.  Kerby,  Catholic  University, 
Washington,  D.  C. 

Richard  T.  Ely,  Professor  Politi- 
cal Economy,  University  of 
Wisconsin,  Madison,  Wis. 

Henry  C.  Adams,  University  of 
Michigan,  Ann  Arbor,  Mich. 

Edward  C.  Mitchell,  President 
Leland  University,  Newton  Cen- 
ter, Mass. 

John  F.  Forbes,  President  John  B. 
Stetson  University,  DeLand, 
Fla. 

John  Graham  Brooks,  Lecturer 
University  of  Chicago,  Cam- 
bridge, Mass. 

Henry  Wade  Rogers,  President 
Northwestern  University, 
Evanston,  111. 

James  R.  Weaver,  Department 
Political  Economy,  De  Pauw 
University,  Greencastle,  Ind. 

A.  E.  Rogers,  Professor  Political 
Economy  and  History.  Univer- 
sity of  Maine,  Orono,  Maine. 


STATE  RAILROAD  COMMISSIONERS. 

R.  S.  Kayler,  Ohio.  D.     N.     Lewis,     Secretary     State 

Benjamin  F.  Chadbourne,  Maine.          Board  of  R.  R.  Commissioners, 
C.   M.   Runyan,    Statistician  Ohio          Iowa. 

Railroad  Commission.  Edward  A.  Dawson,  Iowa. 

Union  B.  Hunt,  Indiana.  David  J.  Palmer,  Iowa. 

I.  A.  Macrum,  Oregon. 

STATE  LABOR  COMMISSIONERS*. 

H.  U.  Thomas,  North  Dakota.  Thos.  P.  Rixey,  Missouri. 

I.  V.  Barton,  West  Virginia.  W.  L.  A.  Johnson,  Kansas. 

INTERSTATE  COMMERCE  COMMISSION. 

Martin     A.      Knapp,      Chairman,       W.  J.  Calhoun,  Danville,  111. 
Syracuse,  N.  Y.  Charles  A.  Prouty,  Newport,  Vt. 

THE  NATIONAL  BOARD  OF  FIRE  UNDERWRITERS. 

E.  C.   Irwin,  President,  Philadei-      Charles  S.  Hollingshead,  Philadel- 
phia, Pa.  phia,  Pa. 

Thomas  S.  Chard,  Chicago.  111.          George  W.  Babb,  New  York  City. 
M.  D.  Driggs,  New  York  City.  I.  S.  Blackwelder,  Chicago,  111. 

THE  COMMERCIAL  CLUB  OF  BIRMINGHAM,  ALA. 
John  W.  Tomlinson. 

INDIANA  STATE  BOARD  OF  COMMERCE. 

Wm.  Fortune,   President,  Indian-  J.  R.  Goodwin,  Evansville. 

apolis.  Mortimer  Levering,  Commercial 

C.  J.  Murphy,  Secretary,  Evans-  Club,  Lafayette. 

ville.  Chas.  R.  Lane,  Commercial  Club, 

John  H.  Holliday,  Commercial  Ft.  Wayne. 

Club,   Indianapolis.  D.  M.  Parry,  Board  of  Trade,  In- 

A.  M.  Higgins,  Commercial  Club,  dianapolis. 

Terre  Haute.  A.  F.  Potts,  Indianapolis. 

FARMERS'  NATIONAL  CONGRESS. 

B.  F.  Clayton,  Indianola,  la.  J.  J.  W.  Billingsley,  Indianapolis, 
H.  E.  Heath,  Omaha,  Neb.  Ind. 

Lafayette  Funk,  Shirley,  111.  John  M.  Stahl,  Secretary. 

ASSOCIATION  OF  WESTERN  MANUFACTURERS. 

Edward  P.  McFetridge,  President,  H.  G.  Niles,  Jr.,  South  Bend,  Ind. 

Baraboo,  Wis.  E.    C.   McFetridge,   Beaver   Dam, 

Walter  Fieldhouse,  Secretary  and  Wis. 

Treasurer,  Chicago,  111.  Richard  Yates,  Jacksonville,  111. 
George  Brickner,  Sheboygan  Falls, 

Wis. 

BOARD  OF  TRADE,  SPRINGFIELD,  ILL. 

F.  W.  Tracey.  L.  E.  Wheeler. 
S.  P.  Wheeler.  D.  W.  Smith. 
J.  T.  Peters.                                           J.  F.  Miller. 

21 


NORTHWESTERN  TRAVELING  MEN'S  ASSOCIATION. 

George  J.  Reed,  Chicago,  111.  S.  H.  Crane,  Chicago,  111. 

John  M.  Levis,  Chicago,  111.  G.  M.  Pennoyer,  Chicago,  111. 

R.  A.  Scovel,  Chicago,  111.  Willis  Young,  Chicago,  111. 

W.  H.  Cribben,  Chicago,  111. .  George  W.  Bailey,  Chicago,  111. 

BUSINESS  MEN'S  LEAGUE  OF  DUBUQUE,  IA. 

James  McFaddeti.  John  Mehlop. 

A.  F.  Frudden.  Robert  W.  Stewart. 
John  M.  McDonald.  M.  M.  Walker. 

J.  F.  Merry. 

IOWA  STATE  TRAVELING  MEN'S  ASSOCIATION. 

DES  MOINES,  IOWA. 

F.  E.  Haley,  Secretary  and  Treas-       T.  M.  Langan,  Chairman  Board  of 
urer.  Directors. 

MILLERS'  NATIONAL  ASSOCIATION. 

C.  B.  Cole,  President,  Chester,  111.       F.     H.     Magdeburg,     Milwaukee, 

B.  A.  Eckhart,  Chicago,  111.  Wis. 

Frank  Barry,  Milwaukee,  Wis. 

BUSINESS  MEN'S  LEAGUE  OF  ST.  LOUIS. 

J.  C.  Birge.  Leo  Rassieur. 

S.  M.  Kennard.  Corwin  H.  Spencer. 

Edward  Devoy.  J.  S.  Finkenbiner. 

BOARD  OF  TRADE,  CHICAGO. 

R.  S.  Lyon,  President.  D.  E.  Richardson. 

Wm.  T.  Baker.  B.  A.  Eckhart. 

F.  G.  Logan.  George  F.  Stone. 

CINCINNATI   BOARD   OF  TRADE  AND  BUREAU  OF 
TRANSPORTATION. 

James  J.  Hooker,  President.  W.  J.  Breed. 

J.  Gordon  Taylor.  E.  P.  Wilson. 

J.  M.  Macdonald. 

COMMERCIAL  CLUB  OF  OMAHA. 

Euclid  Martin.  I.  W.  Carpenter. 

H.  W.  Yates.  W.  D.  McHugh. 

George  W.  Wright. 

NATIONAL  GRAIN  GROWERS'  ASSOCIATION. 

S.  H.  Greeley,  Chicago,  111.  M.  S.  Blair,  Ojatta,  N.  D. 

M.  P.  Moran,  Graceville,  Minn.          S.  Lindsay,  Irene,  S.  D. 
J.  C.  Hanley,  St.  Paul,  Minn. 

TARIFF  REFORM  COMMITTEE.  REFORM  CLUB  OF  NEW 

YORK. 
Lawson  Purdy. 

22 


INDIANAPOLIS  BOARD  OF  TRADE. 

John  S.  Lazarus,  President.  Samuel  E.  Morss. 

John  L.  Griffiths. 

DETROIT  CHAMBER  OF  COMMERCE. 

George  H.  Barbour.  W.  A.  Pungs. 

Homer  Warren.  J.  C.  Hutchins. 

W.  A.  C.  Miller. 

ST.  LOUIS  MANUFACTURERS'  ASSOCIATION. 

J.  W.  Van  Cleave.  R.  L.  Blackmer. 

W.  E.  Nolker.  John  C.  Roberts. 

Elias  Michael. 

NATIONAL   FARMERS'  ALLIANCE   AND   INDUSTRIAL 
UNION  OF  AMERICA. 

John  C.  Hanley,  St.  Paul,  Minn.  Miss  Bessie  Murray,  Wintersette, 

John  Hill,  Jr.,  Chicago,  111.  Iowa. 

P.  H.  Rahilly,  Lake  City,  Minn.  Thomas  Dodd,  Hope,  N.  D. 

J.  B.  Sossaman,  Charlotte,  N.  C.  A.   S.  Stephens,  Beardsley,  Minn. 

PATENT  LAW  ASSOCIATION  OF  CHICAGO. 

Taylor  E.  Brown.  James  H.  Raymond. 

L.  L.  Bond.  P.  C.  Dyrenforth. 

Lysander  Hill. 

MINNEAPOLIS  BOARD  OF  TRADE. 

Cyrus  Northrop.  J.  S.  McLain. 

W.  W.  Folwell.  S.  A.  Harris. 

T.  B.  Walker.  Frederick  W.  Lyman. 

W.  S.  Dwinnell. 

UNIVERSITY  OF  CHICAGO. 

Wm.  R.  Harper,  President.  Oscar  Lovell  Triggs. 

Harry  Pratt  Judson.  Shailer  Mathews. 

Frank  Frost  Abbott.  '  Charles  Zeublin. 

Adolph  Caspar  Miller.  James  Hayden  Tufts. 
Charles  Herbert  Thurber.                .      William  Isaac  Thomas. 

Francis  Wayland  Shepardson.  Ralph  C.  H.  Catterall. 

William  Hill.  Albion  W.  Small. 

ILLINOIS  COMMERCIAL  MEN'S  ASSOCIATION. 

James  O'Donnell,  Chicago,  111.  George  W.  Smith. 

L.  A.  Tyler,  Chicago,  111.  R.  A.  Cavenaugh. 

George     H.     Holden,     Chairman 
Board  of  Directors. 

DETROIT  MERCHANTS'  AND  MANUFACTURERS' 

EXCHANGE. 

George  H.  Barbour.  John  S.  Gray. 

Clarence  A.  Black.  Fred  F.  Ingram. 

Edwin  Armstrong.  Walter  S.  Campbell. 

John  B.  Howarth.  O.  R.  Baldwin. 

James  Inglis. 

23 


MICHIGAN  STATE  MILLERS'  ASSOCIATION. 
J.  J.  Hanshue,  Secretary  and  Treasurer,  Lansing,  Mich. 

SINGLE  TAX  LEAGUE  OF  THE  UNITED   STATES. 

Richard  Dalton,  Saverton,  Mo.  Millard  F.  Bingham,  Chicago,  111. 

F.  H.  Monroe,  Chicago,  111.  John  Z.  White,  Chicago,  111. 

Louis  F.  Post,  Chicago,  111. 

AMERICAN  ANTI-TRUST  LEAGUE. 

M.      L.      Lockwood,      Zelienople,      W.  B.  Fleming,  Kentucky. 
Pennsylvania. 

STATEN  ISLAND  CHAMBER  OF  COMMERCE. 
Samuel  Adams  Robinson,  West  New  Brighton,  S.  I. 

COMMERCIAL  TRAVELERS'  AND   HOTEL  MEN'S   LEAGUE. 
E.  M.  Tierney,  Binghamton,  N.  Y. 

AMERICAN  ACADEMY  OF  POLITICAL  AND   SOCIAL 
SCIENCE. 

E.  J.  James,  Chicago,  111.  Clinton  Rogers  Woodruff,   Phila- 
Stuart  Wood,  Philadelphia,  Pa.  delphia,  Pa. 

John  H.  Gray,  Evanston,  111.  Franklin  MacVeagh,  Chicago,  111. 

CINCINNATI  CHAMBER  OF  COMMERCE. 

Wm.  M.  Alms.  A.  H.  Mci^eod. 

James  N.  Gamble.  J.  J.  Hooker. 

C.  H.  Kellogg. 

OSHKOSH  BOARD  OF  TRADE. 

J.  W.  Hollister.  E.  R.  Hicks. 

M.  H.  Eaton.  John  Hicks. 

W.  J.  Wagstaff.  B.J.Daly. 

F.  H.  Josslyn.  J.  H.  Davidson. 
Geo.  A.  Buckstaff.  F.  C.  Stewart. 
Charles  Barber.  Leo  Haben,  Secretary. 

CLEVELAND  CHAMBER  OF  COMMERCE. 
J.  G.  W.  Cowles. 

AMERICAN  SOCIAL  SCIENCE  ASSOCIATION. 

C.  R.  Henderson.  Chicago,  111.  W.  H.  Daly,  Pittsburg,  Pa. 

Wm.  A.  Giles,  Chicago,  111. 

BALTIMORE  BOARD  OF  TRADE. 
Blanchard  Randall. 

COMMERCIAL  CLUB  OF  INDIANAPOLIS. 

John  L.  Griffiths.  Justus  C.  Adams. 

S.  E.  Morss.  Evans  Woollen. 

W.  L.  Taylor. 

24 


NATIONAL  ALLIANCE  OF  THEATRICAL  STAGE  EMPLOYES. 
Lee  M.  Hart,  Chicago,  111. 

DAVENPORT  BUSINESS  MEN'S  ASSOCIATION. 

C.  A.  Ficke.  A.  R.  Judy. 

G.  Watson  French.  M.  J.  Eagal. 

J.  R.  Nutting. 

ILLINOIS    RETAIL    HARDWARE    DEALERS'    ASSOCIATION. 
Z.  T.  Miller,  Bloomington,  111. 

CHAMBER  OF  COMMERCE. 

ST.    PAUL,    MINN. 

E.  V.  Smalley.  Ambrose  Tighe. 

E.  W.  Peet.  Ross  Clarke. 

W.  L.  Chapin. 

CHAMBER  OF  COMMERCE. 

MILWAUKEE,    WIS. 

C.  A.  Chapin.  David  Vance. 
E.  P.  Bacon.  C.  E.  Lewis. 
John  Johnston. 

UNITED  STATES  INDUSTRIAL  COMMISSION. 

Jas.  H.  Kyle,  South  Dakota.  Theo.  Otjen,  Wisconsin. 

J.  W.  Jenks,  New  York.  L.  F.  Livingstone,  Georgia. 

J.  M.  Farquhar,  New  York.  C.  J.  Harris,  North  Carolina. 

CHAMBER  OF  COMMERCE. 

QUINCY,   ILL. 

Charles  H.  Williamson.  Edmund  H.  Botsford. 

Cicero  F.  Perry.  Perry  C.  Ellis. 

AT  LARGE. 

Benjamin  R.  Tucker,  Editor  Liberty,  New  York  City. 

E.  P.  Ripley,  President  A.,  T.  &  S.  F.  Ry.,  Chicago. 

James  B.  Dill,  North  American  Trust  Company,  New  York  City. 

Theodore  C.   Search,   President   National   Manufacturers'   Association, 

Philadelphia,  Pa. 
P.  J.  McGuire,  General  Secretary  United  Brotherhood  of  Carpenters  and 

Joiners  of  America,  Philadelphia,  Pa. 

Stuyvesant  Fish,  President  Illinois  Central  Railroad,  New  York  City. 
P.   H.   Morrissey,   Grand  Master  Brotherhood  of  Railroad  Trainmen, 

Peoria,  111. 
James  H.  Eckels,  ex-Comptroller  of  the  Currency,  Chicago. 

D.  K.  Clink,  Past  Counselor  United  Commercial  Travelers,  Chicago. 
M.    W.    Phalen,    President    Traveling    Men's    Protective    Association, 

Chicago. 

Paul  J.  Maas,  ex-Organizer  American  Federation  of  Labor,  Chicago. 
Franklin  H.  Head.  President  The  Civic  Federation  of  Chicago. 
Ralph  M.  Easley,  Secretary  The  Civic  Federation  of  Chicago, 

85 


Joseph  Nimmo,  Jr.,  President  National  Statistical  Association,  Wash- 
ington, D.  C. 

Samuel  M.  Jones,  Mayor,  Toledo,  O. 

Geo.  A.  Schilling,  ex-Secretary  Illinois  Bureau  of  Labor  Statistics, 
Chicago. 

Laurence  Gronlund,  Editorial  Writer  (since  deceased),  New  York 
Journal,  New  York  City. 

Howard  K.  Wood,  Corporation  Trust  Company  of  New  York,  Jersey 
City. 

E.  S.  Lacey,  ex-Comptroller  of  the  Currency,  Chicago. 

Harry  P.  Robinson.  Editor  Railway  Age,  Chicago. 

Graham  Taylor,  Warden,  Chicago  Commons,  Chicago. 

A.  M.  Compton,  John  V.  Farwell  Co.,  Chicago. 

A.  C.  Bartlett,  President  National  Association  Merchants  and  Travelers, 
Chicago. 

W  D  Hoard,  President  Farmers'  National  Congress,  Ft.  Atkinson, 
'  Wis. 

James  W.  Ellsworth.  New  York  City. 

H.  T.  Newcomb,  United  States  Census  Office,  Washington.  D.  C. 

Edward  W.  Bemis,  Bureau  of  Economic  Research,  New  York  City. 

John  R.  Commons.  Bureau  of  Economic  Research,  New  York  City. 

Thomas  J.  Morgan,  Chicago,  Socialist. 

A.  M.  Simons,  Chicago,  Socialist. 

The  roll  was  corrected  and  approved  at  1£:05  o'clock. 

An  amendment  was  offered  by  Raymond,  of  Illinois,  to  Yel- 
lott's  resolution  providing  that  the  committee  on  organization 
and  program  be  appointed  by  the  chair.  The  amendment  was 
accepted  by  mover,  but  after  a  hot  debate,  McGuirk,  of  Iowa,  and 
Jones,  of '  Wisconsin,  leading  the  opposition,  was  lost. 

An  amendment  was  offered  by  Gans  of  Illinois,  and  seconded 
by  Cockran  of  New  York,  providing  that  the  committee  include 
one  delegate  from  the  Knights  of  Labor  and  one  from  each 
organization  of  more  than  state  scope  represented  in  the  con- 
ference. The  amendment  was  accepted  and  adopted,  after  dis- 
cussion, and  the  motion  with  the  two  amendments  prevailed. 

Pending  the  appointment  and  organization  of  the  committee, 
unanimous  consent  of  the  conference  was  given  to  proceed  with 
the  program  as  originally  planned. 


2.; 


J.  W.  JENKS. 

Statistician  United  States  Industrial  Commission. 

With  the  preface  that  the  speaker  represented  the  industrial 
commission  as  an  expert  in  the  investigation  of  "trusts,"  the 
chairman  introduced  Professor  J.  W.  Jenks,  head  of  department 
of  Political  Economy  of  Cornell  University,  who  said: 

With  the  preface  that  the  speaker  represented  the  Industrial 
Commission  as  an  expert  in  the  investigation  01  ••ii-uci^  u.o 
answering  them.  It  is  certainly  true  that  a  long  step  has  been 
taken  toward  the  solution  of  any  problem  when  the  problem  itself 
has  been  clearly  stated.  It  was  thought  that  it  might  be  of  ser- 
vice, therefore,  if  various  questions  which  the  present  combina- 
tions of  capital  have  raised  (and  toward  the  solution  of  which 
this  conference  may  well  contribute  much),  were  to  be  brought 
together  at  the  beginning  of  the  deliberations.  I  cannot  expect 
to  state  clearly  all  of  those  questions.  I  mention  some  of  the 
most  important  ones  as  they  have  been  called  to  my  attention. 

1.     Competition  versus  combination. 

It  has  often  been  assumed  that  industrial  combinations  are 
monopolies  that  have  abolished  competition.  On  the  other 
hand,  managers  of  the  most  important  ones  invariably  assert  that 
they  have  much  competition,  and  that  the  principle  of  competi- 
tion is  still  active  as  long  as  anyone  is  legally  free  to  set  up  a  rival 
establishment.  Many  students  of  the  question  have  asserted  that 
among  great  industrial  organizations,  competition  is  fiercer  than 
among  smaller  establishments,  and  that  combination  does  not 
abolish  competition,  but  simply  raises  it  to  a  higher  plane.  So 
long  as  there  is  not  a  state  monopoly  like  that  of  the  postoffice, 
or  a  legal  monopoly,  like  that  established  by  a  patent,  there  is  of 
course  at  least  potential  competition.  The  law  permits  a  rival  to 
enter  the  lists.  But  a  question  still  remains :  How  far  do  large 
combinations  of  capital  possess  a  monopoly  in  fact,  if  not  in  law? 
How  far  are  these  large  industrial  combinations  able  to  fix  prices 
on  the  monopolistic  principle  of  securing  the  highest  net  returns 
with  little  reference  to  what  others  charge,  even  though  there 
may  exist  in  the  business  some  few  other,  but  relatively  speaking 
unimportant  establishments?  How  far  can  an  establishment 
which  sells  a  high  percentage,  from  75  to  90  per  cent,  of  the 
total  product,  secure  monopolistic  gains?  Is  competition  to  be 
considered  free  when  one  establishment  controls  from  75  to  90 

27 


per  Cent  of  the  total  product  in  market?  Will  not  the  fear  of  so 
powerful  an  organization  deter  rivals  from  entering  the  field? 

2.  Combinations  of  capital  and  combinations  of  labor. 
Some  most  active  opponents  of  organized  capital  have  been 

found  in  the  ranks  of  organized  labor.  Some  managers  of  indus- 
trial combinations  assert  that  they  have  been  forced  to  combine 
on  account  of  the  power  of  organized  labor.  They  assert  that  the 
principle  of  combination  is  the  same  in  both  cases,  and  that  labor 
organizations  are  no  less  tyrannous  than  are  organizations  of  capi- 
tal. Before  legislation  regarding  combinations  is  undertaken, 
the  question  should  be  clearly  answered,  whether  the  two  classes 
of  organizations  are  the  same  in  principle,  and  whether  a  law 
which  restrains  one  will  be  held  by  the  courts  to  restrain  the  other 
also.  The  differences  in  principle,  if  they  exist,  should  be  made 
perfectly  clear. 

3.  Combinations  caused  by  special  privileges. 

(a)  Mr.  Havemeyer  has  lately  asserted  that  the  "mother  of  all 
trusts  is  the  customs  tariff  law."     Many  industries,  however,  in 
which  great  combinations  exist,  have  no  protection  of  their  prod- 
ucts by  the  tariff.     Managers  of  combinations  which  have  been 
formed  in  protected  industries  assert  often  that  it  has  been  the 
fierceness  of  home  competition  that  has  driven  them  into  combina- 
tion, and  that  if  the  tariff  has  been  in  any  sense  the  cause  of  the 
combination,  it  has  been  such  only  by  developing  the  home  indus- 
try to  so  great  an  extent  that  fierce  competition  was  unavoidable. 
How  large  a  proportion  of  the  trusts  does  the  protective  tariff 
favor?     Would  a  lowering  of  the  tariff  on  protected  industries 
in  which  industrial  combinations  have  been  formed  destroy  the 
combination,  or  would  it  merely  lead  to  international  combina- 
tion such  as  already  exists  in  at  least  one  or  two  instances,  or, 
without  breaking  the  combination,  would  it  have  the  effect  of 
lowering  prices  through  foreign  competition? 

(b)  Other  combinations  of  great  power  have  been  formed  in 
industries  protected  by  patents,  and  have  secured  monopolistic 
prices  through  the  aid  of  the  patent  laws.     Would  it  be  in  the 
interest  of  the  public,  and  would  it  be  practicable  so  to  amend 
our  patent  laws  as  to  remove  from  them  the  element  of  monopoly, 
while  still  securing  to  the  inventor,  by  royalty  or  otherwise,  a 
suitable  reward  for  his  inventive  skill? 

(c)  It  has  been  frequently  asserted  that  the  success  of  many 
of  the  leading  combinations  of  capital  has  been  due  to  special 
favors  granted  them  by  the  railroads.     On  the  other  hand,  some 
declare  that  the  most  successful  combinations  of  the  present  day 
find  it  rather  for  their  interest  to  observe  strictly  the  interstate 

28 


commerce  law,  and  to  insist  upon  it  that  the  railroads  shall  make 
no  discriminations  for  anyone,  whereas  it  is  for  the  interests  of 
those  small  combinations  that  are  still  struggling  for  a  firm  foot- 
hold to  secure  such  discriminations.  It  is  believed  by  many  peo- 
ple that  railroad  discriminations  are  very  frequent.  Most  im- 
portant questions  to  be  solved  are  first,  one  of  fact:  To  what 
extent,  and  to  whom  do  the  railroads  grant  discriminating  rates? 
and  do  these  discriminations  build  up  trusts?  And  second: 
What  further  remedy  can  be  found  for  such  discrimination  be- 
yond that  which  now  exists  under  the  interstate  commerce  law 
and  the  laws  of  the  several  states?  Shall  the  Interstate  Com- 
merce Commission  prescribe  for  the  railroads  their  methods  of 
bookkeeping,  and  shall  the  commission  be  given  the  power  offi- 
cially to  inspect  and  audit  their  books?  Is  the  national  owner- 
ship and  management  of  the  railroads  a  feasible  proposition  for 
the  United  States  to-day? 

4.     Other  causes  for  the  formation  of  combinations  of  capital. 

Managers  of  the  great  capitalistic  organizations  usually  assert 
that  they  have  been  driven  into  combination  through  the  fierce- 
ness of  competition;  that  without  combination,  fair  earnings  on 
capital  could  not  be  realized;  and  that  the  trust  instead  of  being 
an  aggressive  combination,  is  really  capital  on  the  defensive. 
They  also  assert  that  it  is  only  through  the  power  that  conies 
from  a  large  aggregation  of  capital  that  they  are  able  to  meet 
foreign  competition  in  foreign  trade,  and  that  without  such  com- 
bination our  export  trade  could  not  well  be  developed.  They 
declare  that  with  the  development  of  foreign  trade  brought  about 
through  the  combination  of  capital,  they  are  enabled  so  to  in- 
crease their  output  that  not  only  the  profits  of  capital,  but  also  the 
demand  for  home  labor  is  greatly  increased.  How  far  is  such  a 
statement  true?  The  president  of  one  of  the  large  combina- 
tions told  me  a  few  days  ago  that  he  expected  during  the  coming 
year  to  bring  in  to  the  United  States  for  investment  here,  half  a 
million  dollars  in  profits  from  their  export  trade  in  the  far  East. 
All  of  the  raw  material  for  this  export  trade  was  produced  in  the 
United  States,  and  he  asserted' that  the  number  of  laborers  set  to 
work  here  in  producing  the  raw  material  for  this  export  trade  far 
exceeded  the  number  of  those  thrown  out  of  employment  by  the 
combination.  How  far  is  this  example  a  typical  one,  and  how 
far  are  these  arguments  of  the  capitalists  to  be  considered  valid? 
In  this  connection  it  must  not  be  forgotten  that  a  clear  distinc- 
tion is  to  be  drawn  between  a  large  and  powerful  organization 
and  a  monopoly.  The  fiercest  competition  is  that  among  the 
giant  corporations. 

29 


5.     Over-capitalization. 

Most  of  the  newer  combinations  of  capital  have  issued  large 
amounts  of  stock,  common  and  preferred,  as  well  as  of  bonds. 
It  is  important,  at  least  for  the  investor,  to  know  the  facts  regard- 
ing it:  How  much  of  this  capital  is  represented  in  plants  at  a 
fair  valuation  ?  How  much  in  patents  or  brands  ?  How  much  in 
good- will  in  the  proper  sense  of  that  word?  How  much  is 
"water"  ?  It  is  asserted  by  some  that  no  harm  is  done  the  public 
even  though  the  capitalization  be  much  beyond  the  value  of  the 
plants;  that  the  amount  of  capitalization  has  no  effect  on  prices. 
Others,  who  believe  that  in  these  combinations  an  element  of 
monopoly  is  found,  think  that  an  attempt  to  pay  dividends  on  a 
large  capitalization  does  increase  prices.  One  class  of  persons 
asserts  that  capital  stock  should  be  limited  to  the  amount  of  capi- 
tal actually  paid  in  in  cash,  or  in  plants  taken  at  a  conservative 
valuation.  Another  class  believes  that  capitalization  should  be 
fixed  by  the  probable  earning  capacity  of  an  establishment.  It  is 
urged  as  an  example,  that  a  newspaper  with  a  plant  valued  at  a  hun- 
dred thousand  dollars  may  well  earn  large  dividends  on  a  million 
owing  to  the  genius  of  the  editor.  Why,  it  is  asked,  not  capi- 
talize at  a  million?  But  on  the  other  hand  it  is  asked,  should 
we  put  into  permanent  securities  to  be  bought  by  the  investing 
public  a  value  depending  so  largely  upon  the  talents  of  one 
short-lived  individual?  Again,  a  street  railway  which  costs 
$500,000,  and  whose  franchise  may  have  cost  nothing,  may  well 
pay  good  profits  on  $1,000,000,  or  $2,000,000.  Is  it  in  the 
public  interest  that  a  public  franchise  be  thus  capitalized  into 
permanent  securities,  so  as  to  pay  dividends  on  $1,000,000  or 
$2,000,000,  especially  if  the  people  are  prevented  thereby  from 
seeing  the  source  of  profits?  Most  persons  would  readily 
grant  that  genius,  or  even  the  nerve  that  is  shown  in  investing 
capital  in  new  enterprises  should  meet  with  a  fitting  reward.  It 
is  a  question  not  yet  practically  settled,  and  one  which  most  peo- 
ple have  not  yet  even  settled  in  principle  in  their  own  minds, 
whether  it  is  in  the  interest  of  the  public  that  by  high  charges 
dividends  should  be  earned  on  capitalization  which  represents  a 
public  franchise,  or  on  that  which  represents  the  monopolistic 
element  created  simply  by  the  aggregation  of  capital,  without  the 
application  of  special  talent  or  exceptional  skill.  Is  it  desirable 
to  limit  capitalization  or  to  give  to  the  public  by  taxation  part  of 
the  profits  or  to  make  the  nature  of  the  capitalization  of  each 
organization  public,  so  that  any  investor  can  readily  learn  how 
large  a  proportion  in  every  case  is  represented  by  plant,  how 
much  by  patents  or  special  brands,  how  much  by  good-will,  and 


how  much  is  nothing  but  "water*'?  Would  such  knowledge  ade- 
quately protect  the  investor?  \Vould  such  knowledge,  by  invit- 
ing competition,  if  real  profits  were  made  public,  sufficiently  pro- 
tect the  consumer?  Many  of  our  best  thinkers  think  no  further 
remedy  is  needed.  Are  the  interests  of  the  stockholders  in  the 
stability  of  business  and  the  interests  of  the  consumers  in  steady 
and  low  prices,  under  present  industrial  conditions,  the  same? 
6.  Effects  of  the  combinations. 

(a)  On  prices.  -It  remains  still  to  be  fully  established  what 
the  effects  of  these  combinations  are  upon  the  prices  of  raw  mate- 
rial and  of  the  finished  products.     Are  prices  of  raw  materials 
held  lower  than  is  normal  by  the  combination?     Are  the  prices 
of  the  finished  product  lowered  or  made  higher  by  the  combina- 
tion?    Is  it  possible  that  competition  can  force  prices  so  low, 
that  by  driving  into  bankruptcy  a  large  number  of  establish- 
ments the  interests  of  the  public  will  be  seriously  injured?     Is 
it  in  the  interests  of  the  laborers  and  of  the  public  at  large, 
that  the  fiercest  possible  competition  in  prices  be  encouraged? 
One  of  the  leading  rivals  of  the  sugar  combination  has  lately 
asserted  that  he  believed  the  formation  of  the  sugar  trust  had  the 
effect  on  the  whole  of  lowering  prices.     Although  the  trust  im- 
mediately put  prices  up,  had  competition  continued  longer  so 
many  more  refiners  would  have  failed,  he  thought,  that  the  short 
supply  on  the  market  would  have  pushed  prices  far  above  the  rate 
established  by  the  trust. 

(b)  On  wages.     Despite  the  fact  that  the  wage-earners  them- 
selves seem  to  be  in  good  part  opposed  to  the  industrial  combina- 
tions, it  is  often  asserted  by  the  managers  of  the  trusts  that  com- 
binations of  capital  have  increased  the  wages  of  the  laboring 
men.    The  laborers  themselves  assert  often  that  these  combina- 
tions throw  many  men  out  of  employment.    They  believe  also  that 
combinations,  by  controlling  practically  all  of  the  plants  of  any 
one  industry,  are  in  much  better  condition  to  resist  the  demands 
of  labor,  and  to  endure  any  pressure  that  can  be  brought  upon 
them  by  threats  of  strikes.     A  strike  in  one  or  two,  or  several 
establishments,  will  not  affect  the  combination  materially,  pro- 
vided it  can  carry  on  production  in  its  other  establishments  at 
the  same  time.     The  growth  of  great  corporate  organizations  of 
capital,  they  think,  therefore,  will  give  the  death  blow  to  tradB 
unions.     But  the  question  is  not  yet  settled.     May  the  laborers 
possibly,  by  making  also  a  thorough  combination  covering  the' 
whole  of  any  one  industry,  be  as  well  able  to  deal  with  their  em- 
ployers as  they  are  at  the  present  time?     If  their  organization 
covers  only  two  or  three  plants,  they  appear  to  be  at  a  disad- 

31 


vantage.  If  their  organization  covers  the  entire  industry,  can 
the  laborers  and  capitalists  then  act  together  as  a  unit  in  fixing 
wages  over  the  whole  territory?  Through  their  agreements  on 
wages,  can  they  more  readily  control  the  prices  to  consumers  than 
has  ever  been  the  case  heretofore?  Would  not  the  capitalists 
prefer  to  tax  the  consumer,  rather  than  the  workman  if  he  has  a 
choice,  and  if  one  must  suffer,  to  give  him  his  profit  ?  If  so  com- 
plete a  system  of  organization  of  lahor  is  difficult  to  start  and  to 
manage,  will  it  be  in  the  interest  of  the  employers  to  aid  the  labor- 
ers in  making,  and  holding,  this  organization,  in  order  more 
effectively  to  control  prices?  These  questions  are  not  yet  settled; 
and  a  fertile  subject,  not  for  speculation  merely,  but  for  serious 
thought,  remains  in  the  possibility,  of  such  an  extension  of  labor 
unions  that  the  employers  and  employees  throughout  an  entire 
industry,  can,  with  little  fear  of  successful  opposition,  practically 
fix  prices  arbitrarily  by  agreement.  Another  form  of  union  to 
reach  the  same  end,  and  one  which  has  already  a  basis  in  success- 
ful experience,  is  for  the  workmen  to  become  stockholders  in  the 
combination,  and  thus  to  divide  with  the  capitalist  the  profits  of 
monopoly.  How  generally  can  this  plan  be  made  practicable? 
The  effects  upon  the  consuming  community  at  large  of  any  such 
union  of  employer  and  workingman  need  also  careful  study. 

(c)  Upon  middlemen.  A  third  complaint  against  great  capi- 
talistic organizations  comes  from  the  middlemen,  particularly 
from  jobbers  and  wholesale  dealers,  who  assert  that  the  trusts 
are  eliminating  them.  Is  this  elimination  of  the  middlemen,  as 
well  as  the  saving  of  labor,  to  be  considered  on  the  whole  a  gain 
to  the  community  or  a  loss?  .If  the  trust  can  deal  directly  with 
two  or  three  large  jobbers,  can  fix  their  prices,  and  guarantee 
their  profits,  will  there  be  enough  saving  in  energy  to  the  com- 
munity to  make  up  for  the  loss  to  the  others  who  are  driven  out  of 
business  temporarily?  Will  it  also  be  possible  within  a  compara- 
tively short  time  for  those  persons  whose  business  is  thus  ruined, 
as  well  as  for  the  laborers  who  .are  driven  out  of  employment  by 
the  combinations,  to  secure  employment  elsewhere  through  the 
added  demand  that  may  come  from  the  saving  of  cost  and  of  labor 
energy,  and  from  the  increase  in  the  export  trade? 

It  is  asserted  that  the  trust,  by  killing  the  small  establishment, 
checks  the  growth  of  individuality  in  young  business  men,  making 
of  them  mere  hirelings.  Others  assert  that  no  one  is  fit  for  com- 
mand till  he  has  first  learned  to  obey ;  that  in  the  great  organiza- 
tions there  are  many  positions  of  responsibility,  in  which  indi- 
vidual initiative  can  have  full  play;  that  the  distribution  of 
rewards  to  men  of  real  merit  is  much  more  certain  and  just  when 

82 


business  is  well  organized ;  and  that  the  places  at  the  top  are  much 
more  worthy  the  ambition  of  the  man  of  great  individual  power. 

An  example  has  been  lately  suggested:  If  a  dozen  small 
railroads  unite  into  one  great  system,  few  men  lose  posi- 
tions.- The  general  superintendents  of  the  small'  roads  be- 
come division  superintendents  of  the  large  system,  with  no 
decrease  in  pay,  with  substantially  the  same  duties  and  respon- 
sibilities, although  frequent  reports  are  required  from  a  general 
superintendent.  Before  the  consolidation,  reports  went  to  the 
president  and  directors.  The  best  men  have  better  opportunities 
for  higher  position:  the  average  men  do  not  lose;  the  poor  men 
are  more  surely  thrust  down  to  pure  routine  labor.  Will  not  the 
same  effect  be  generally  found  in  all  consolidations? 

The  question  is  perhaps  the  most  vital  one  of  the  whole  dis- 
cussion. Only  experience  can  give  the  final  answer. 

On  the  whole,  then,  are  we  to  consider  the  new  form  of  organ- 
ization a  means  of  saving  energy  comparable  with  a  new  inven- 
tion like  the  steam  engine  or  the  railroad,  so  that  we  may  be 
fairly  sure  that,  although  temporary  suffering  occurs,  there  will 
be  enough  saving  to  lower  prices  and  to  increase  the  demand  for 
goods  to  so  great  an  extent  that  the  total  demand  for  labor  will 
in  the  long  run  be  increased  and  the  public  benefited?  Or,  on 
the  other  hand,  is  the  new  form  of  organization  a  conspiracy  of 
the  few  rich  and  powerful  to  oppress  the  many?  Each  view  is 
taken  by  thousands. 

7.     Legislation. 

If  the  state  needs  to  interfere  in  this  modern  industrial  move- 
ment, what  form  of  legislation  is  wisest?  Should  it  be  destruc- 
tive, attempting  to  prevent  combination,  or  should  it  be  regu- 
lative, permitting  combination  freely,  but  attempting  so  to  con- 
trol that  evils  to  the  public  may  be  avoided?  Of  legislation  aim- 
ing at  destruction  we  have  had  many  examples.  The  question 
still  remains  unsettled  as  to  how  far  this  legislation  will  prove 
effective.  Some  points  have  been  given  interpretation  by  the 
courts ;  some  have  yet  to  be  tested ;  experience  only  will  show  the 
outcome. 

So  far  as  legislation  is  to  be  regulative,  will  it  be  sufficient  to 
secure  publicity,  or  can  something  be  done  to  prevent  undue 
raising  or  lowering  of  prices  and  wages? 

A  second  question  of  not  less  import  is  this, — How  far  can 
such  legislation  be  national  under  the  general  provisions  of  our 
constitution  regarding  interstate  commerce,  and  how  far  must  the 
legislation  be  state? 


To  be  more  specific  as  we  summarize:  Can  there  be,  if  it 
seems  desirable,  within  a  reasonable  time.,  a  national  incorpora- 
tion of  great  industries,  over  which  the  federal  government  shall 
have  sole  control?  Can  organizations  then,  which  place  them- 
selves under  federal  supervision  and  control,  be  exempt  from  a 
variety  of  legislation,  either  friendly  or  hostile,  of  the  several 
states? 

Can  Congress  now,  under  our  present  constitution,  providing 
for  the  regulation  of  commerce  between  the  states,  secure  by  new 
legislation  full  information  regarding  the  nature  of  the  property 
and  business  of  great  corporations,  railroad  and  others,  and  fre- 
quent reports  regarding  the  condition  of  the  business  with  power 
of  inspection  of  records,  so  that  confidence  may  be  assured?  If 
such  publicity  is  sought,  must  a  special  commission  or  bureau  be 
created  for  the  administrative  work  ? 

If  such  inspection  shows  very  high  profits,  will  the  fear  and 
possibility  of  competition  so  lower  prices  as  to  distribute  these 
profits  among  the  public,  or  would  it  be  wise  to  attempt,  without 
destroying  the  spirit  of  enterprise,  to  give  part  of  the  profits  to 
the  public  through  taxation? 

Can  the  separate  states,  by  any  of  the  measures  suggested,  or 
by  others,  effectively  promote  the  interests  of  their  citizens  by 
legislation  without  substantial  uniformity  of  legislation  among 
them  all?  Can  such  uniformity  be  secured,  or  even  hoped  for? 

There  are  other  problems  created  by  the  industrial  combina- 
tions. I  have  mentioned  the  most  important  ones  to  which  my 
attention  has  been  called.  It  is  hoped  that  wise  counsel  and 
conservative  though  bold  action,  may,  in  no  long  time,  solve  some 
of  them. 

If  it  will  not  be  considered  out  of  place,  may  I  venture  to  sug- 
gest that  the  security  of  the  state,  and  the  welfare  of  the  people, 
is  always  best  attained,  not  through  suspicion  and  denunciation, 
but  through  confidence  in  an  opponent's  honesty  of  purpose,  and 
through  an  earnest  endeavor  to  get  the  other  man's  point  of  view. 
I  have  known  many  of  the  trust  leaders  and  advocates,  and  many 
of  their  chief  opponents.  In  uprightness,  sincerity,  public  spirt, 
patriotism,  there  is  little  difference  among  them.  Likewise  in 
earnest  determination  to  look  out  for  themselves  and  to  protect 
what  they  consider  their  own,  there  is  little  difference.  We  all 
have  our  weaknesses:  few  of  us  are  all  bad.  The  chief  endeavor 
of  men  in  legislatures  or  elsewhere  should  be  not  as  opponents, 
for  each  to  hold  his  own  regardless  of  right,  as  is  only  too  natural, 
but  as  students,  for  each  to  be  sure  that  he  understands  the  other 

M 


and  respects  the  other's  sincerity.  Lincoln's  dictum  of  "char- 
ity  for  all"  was  not  only  Christlike,  it  was  also  statesmanlike. 
The  true  statesman  seeks  the  truth  and  through  candor  and  fair 
dealing  and  mutual  respect  can  one  best  attain  the  truth. 

At  1:10  o'clock  the  conference  took  a  recess  until  3  o'clock. 


AFTERNOON  SESSION,    SEPTEMBER  13. 

The  caucuses  of  the  delegations  in  selecting  the  members  of 
the  committee  on  organization  and  program  prevented  a  full 
attendance  of  delegates  until  some  time  after  the  afternoon  ses- 
sion was  called  to  order  by  Chairman  Head  at  3  o'clock.  The 
galleries  were  filled,  however,  and  an  ovation  was  given  Professor 
Henry  C.  Adams,  head  of  department  of  Political  Economy  of 
the  University  of  Michigan,  when  he  was  introduced. 

HENRY  C.  ADAMS. 

Statistician  Interstate  Commerce  Commissior. 

I  have  been  requested  to  undertake  a  statement  of  the  ques- 
tions that  arise  in  the  consideration  of  the  trust  problem.  In 
doing  this  1  shall  say  nothing  that  is  new,  nor  shall  it  be  my  aim 
to  be  exhaustive.  It  is  possible,  however,  that  questions  which 
are  familiar  may  present  themselves  in  a  new  light  when  brought 
together  in  a  single  statement. 

Whatever  the  trust  problem  may  be,  it  has  to  do  with  busi- 
ness organization,  and  on  this  account  the  first  question  that 
suggests  itself  is  one  that  pertains  to  the  science  of  economics. 
We  observe  in  almost  every  form  of  business  that  industrial 
power  is  concentrating  itself,  that  organizations  are  growing  in 
size,  that  individual  industry  and  small  enterprises  are  being 
crowded  to  the  wall,  and  that  the  sphere  of  .competition  is  con- 
stantly being  narrowed.  This  tendency  is  opposed  to  the  theory 
upon  which  our  system  of  jurisprudence  rests,  and  it"  is  pertinent 
to  inquire  whether  it  is  inherent  in  the  nature  of  the  industries 
that  are  thus  tending  toward  consolidation,  or  whether  its  ex- 
planation is  to  be  found  in  the  peculiar  conditions  under  which 
industry  at  the  present  time  is  carried  on.  This  is  a  most  im- 
portant question:  for  if  the  tendency  toward  consolidation  be 
natural,  remedial  legislation  should  address  itself  to  the  control 

35 


of  the  industrial  forces  thus  brought  together.  If,  on  the  other 
hand,  this  tendency  be  artificial,  the  legislature  in  dealing  with 
the  situation  must  seek  to  restore  those  conditions  under  which 
individual  enterprise  may  he  able  to  maintain  itself.  Without 
undertaking  the  analysis  of  industrial  conditions  and  motives 
which  a  consideration  of  this  question  involves,  I  shall  state  at 
once  what  seems  to  be  the  correct  opinion  upon  this  subject. 
Industries  are  not  all  of  the  same  kind.  They  do  not  all  possess 
the  same  character.  Some  tend  toward  consolidation  and  com- 
bination, while  others  are  well  fitted  by  their  character  to  con- 
tinue a  separate  and  a  competitive  existence.  The  transportation 
industries  are  of  the  former  class.  The  manufacturing  indus- 
tries are,  speaking  generally,  of  the  latter  class.  Railways  by 
their  very  nature  tend  toward  combinations  and  consolidations. 
The  biscuit  industry,  the  manufacture  of  nails,  the  refining  of 
oil,  on  the  other  hand,  are  well  fitted  for  individual  management 
and  administration.  If  these  latter,  like  the  former,  show  a  ten- 
dency toward  consolidation,  the  explanation  will  be  found  in  the 
peculiar  conditions  under  which  they  are  carried  on.  Thus  again, 
upon  the  threshold  of  this  discussion,  do  we  discover  the  im- 
perative necessity  of  industrial  analysis,  as  a  guide  to  right  policy 
and  sound  legislation. 

Before  coming  to  questions  of  general  policy,  there  is  another 
question  which  will  undoubtedly  be  made  the  subject  of  warm  dis- 
cussion by  this  convention.  Are  the  combinations  commonly 
called  trusts  advantageous  or  disadvantageous?  Is  the  tendency 
toward  consolidation  one  to  be  approved  or  disapproved?  It  is 
likely  that  this  discussion  will  turn  upon  three  points:  First, 
does  consolidation  of  manufacturing,  industries  tend  toward  the 
reduction  of  cost?  Second,  will  manufacturing  under  trusts,  by 
measuring  the  output  to  the  current  demand,  tend  to  guard 
society  from  the  evils  of  commercial  panics  and  commercial  de- 
pressions? ,And  lastly,  is  this  new  organization  of  industry  in 
harmony  with  a  democratic  organization  of  society?  Here  again 
I  must  ask  the  privilege  of  expressing  an  opinion,  as  the  time 
allotted  this  paper  does  not  permit  a  full  statement  of  the  reasons 
upon  which  my  opinion  rests. 

It  is  common  to  say  that  increase  in  the  size  of  a  manu- 
facturing plant  permits  the  production  of  commodities  at  less 
cost  than  would  otherwise  be  the  case.  There  is  undoubtedly 
some  truth  in  this  statement.  The  development  of  machinery 
has  gone  hand  in  hand  with  the  growth  of  factories,  and  as  a 
result  the  product  is  furnished  at  a  cheapened  rate.  But  there 
is  a  limit  to  the  application  of  this  rule.  Every  manufacturing 

36 


industry,  considered  from  the  point  of  view  of  production,  has  at 
any  particular  time  a  size  which  may  be  regarded  as  its  normal 
size  of  maximum  efficiency.  This  normal  size  of  maximum  effi- 
ciency is  determined  by  the  extent  to  which  division  of  labor  and 
the  use  of  machinery  can  be  applied.  To  increase  such  an  indus- 
try by  one-half  would  not  result  in  a  decrease  of  the  cost  of  man- 
ufacture, for  it  would  occasion  a  less  effective  application  of  the 
principle  of  division  of  labor.  While,  therefore,  it  is  true  that 
the  concentration  of  capital  and  labor  under  a  single  direction 
is  followed  by  economy  up  to  a  certain  point,  it  is  not  true  that 
combination  and  concentration  beyond  that  point  tends  to  reduce 
the  cost  of  production.  He  who  accepts  this  statement  of  the 
case  must  conclude  that  manufacturing  combinations  (I  say  noth- 
ing of  other  forms)  contribute  nothing  to  the  reduction  of  the 
cost  of  manufacture  beyond  what  would  be  contributed  should 
each  of  the  industries  continue  its  independent  competitive  ex- 
istence. This  is  a  curt  answer  to  a  profound  question,  but  it  is 
believed  to  rest  upon  sound  analysis  and  to  lead  to  the  conclu- 
sion that  the  motive  for  a  trust  organization  of  manufacturing 
industries  is  not  found  in  a  desire  to  benefit  the  public  by  the 
reduction  of  cost. 

It  is  not  so  difficult  to  suggest  the  line  of  reasoning  upon  the 
second  question  submitted.  The  chief  argument  in  favor  of  com- 
binations among  producers  is  that  bv  this  means  product  will  be 
measured  to  demand,  and  consequently  there  will  be  no  over- 
stocking of  the  market,  no  commercial  depression,  and  no  com- 
mercial panic.  I  shall  not  undertake  to  argue  this  proposition, 
but  content  myself  with  a  single  comment.  Opposed  to  this 
theory  of  commercial  depressions  stands  the  well-wrought  theory 
of  socialistic  writers  which  rests  upon  the  claim  that  a  stocked 
market  is  due  to  an  uneconomic  distribution  of  values,  and  not 
to  an  overproduction  of  goods.  It  certainly  is  true  that  goods 
cannot  be  sold  when  the  property  in  the  goods,  as  also  the  money 
with  which  to  purchase  them  is  in  the  same  hands.  A  steady 
market  implies  an  equation  between  goods  on  the  one  hand  and 
purchasing  power  in  the  hands  of  those  for  whom  the  goods  are 
made  on  the  other.  You  perceive  at  once  the  bearing  of  this 
line  of  reasoning  upon  the  claim  that  combinations  tend  to  stead- 
iness of  trade.  For  if  the  trusts  which  tend  to  concentrate  indus- 
trial control,  concentrates  also  industrial  values,  it  is  evident  upon 
the  theory  of  industrial  crises  just  related  that  such  organizations 
intensify  the  conditions  that  lead  to  commercial  crises.  An 
adjustment  of  the  output  to  the  current;  effective  demand  is  of 
the  utmost  importance.  It  may  be  questioned,  however,  whether 

37 


a  yet  further  concentration  of  industrial  power  than  that  which 
now  exists  is  the  best  means  of  attaining  this  result. 

In  addition  to  these  purely  industrial  considerations  it  is 
necessary  to  inquire  respecting  the  general  social  and  political 
results  of  trust  organizations  before  one  can  accept  them  as  a 
healthful  tendency  in  modern  life.  It  must  be  remembered  that 
our  industrial  society  rests  upon  Engli-h  jurisprudence,  that  Knir- 
lish  jurisprudence  acknowledges  the  individual  as  the  center  of 
all  industrial  activity,  that  it  provides  for  him  the  institution  of 
private  property,  holds  him  to  strict  accountability,  and  assumes 
that  competition  between  producers,  on  the  one  hand,  and  pur- 
chasers, on  the  other  hand,  is  a  guarantee  of  justice  and  equity 
in  all  industrial  conduct.  Do  trusts  fit  naturally  into  this  theory 
of  society?  For  the  preservation  of  democracy  there  must  be 
maintained  a  fair  degree  of  equality  in  the  social  standing  of  citi- 
zens; do  trusts  tend  to  such  equality?  For  the  normal  workings 
of  that  industrial  society  which  is  the  product  of  six  centuries  of 
history  the  door  of  opportunity  must  not  be  closed ;  do  trusts  tend 
to  close  the  door  of  opportunity?  For  the  realization  of  the 
American  idea  of  government  there  must  be  a  balance  of  power, 
not  only  between  the  several  departments ,  of  government,  but 
between  the  government  on  the  one  hand,  and  the  interests  that 
lie  outside  the  government,  on  the  other  hand;  do  trusts  tend  to 
destroy  this  balance  of  power?  I  would  not  claim,  without  dis- 
cussion, that  the  trust  organization  of  society  destroys  reasonable 
equality,  closes  the  door  of  industrial  opportunity,  or  tends  to 
disarrange  that  fine  balance  essential  to  the  successful  workings 
of  an  automatic  society; -but  I  do  assert  that  the  questions  here 
presented  are  debatable  questions,  and  that  the  burden  of  proof 
lies  with  the  advocates  of  this  new  form  of  business  organization. 

If  the  current  tendency  toward  consolidation  in  manufactur- 
ing industries  does  not  spring  from  the  nature  of  the  industry, 
and  if  the  benefits  accruing  to  the  public  from  these  consolida- 
tions are  at  least  questionable,  it  is  incumbent  upon  us  next  to 
inquire  out  of  what  conditions  these  modern  industrial  organiza- 
tions have  sprung.  I  shall  venture  but  three  suggestions  in  this 
connection.  Doubtless  many  more  will  be  presented  as  this  con- 
vention proceeds  in  its  deliberations. 

The  inequalities  which  exist  in  established  schedules  of  rail- 
way rates,  as  also  the  proneness  of  railways  to  depart  from  pub- 
lished schedules  in  order  to  secure  the  business  of  large  shippers, 
works  toward  the  consolidation  of  manufacturing  Industrie-  and 
commercial  enterprises.  It  is  not  intended  to  say  that  mal-ad- 
miiiist ration  on  the  part  of  railways  is  of  itself  responsible  for 

38 


present  industrial  tendencies.  It  is,  however,  true  that  in  so  far 
as  railways  discriminate  in  favor  of  large  shippers,  they  present 
a  motive  to  shippers  to  become  as  large  as  possible.  This  is  too 
familiar  a  fact  to  call  for  discussion.  The  truth  is  that  the  busi- 
ness of  transportation  underlies  all  other  businesses,  it  determines 
the  conditions  upon  which  other  forms  of  industry  are  carried 
on,  and  by  the  manipulation  of  rate  schedules  tone,  color  and 
character  can  be  given  to  industrial  society  at  large.  While  the 
solution  of  the  railway  problem  would  not  necessarily  cause  all 
trusts  and  combinations  to  disappear,  its  solution  is  essential  for 
dealing  wisely  with  the  trust  problem.  No  one  can  deny  that 
inequitable  railway  charges  and  discriminations  in  railway  rates 
are  important  elements  in  the  conditions  that  foster  commercial 
combinations. 

In  further  explanation  of  the  current  tendency  toward  busi- 
ness combination  on  the  part  of  industries  that  by  their  nature 
are  not  monopolistic,  reference  may  be  made  to  the  fact  that  the 
commercial  jurisdiction  of  modern  business  is  much  broader  than 
the  political  jurisdiction  of  the  governments  whose  protection 
they  seek  and  by  whom  they  should  in  theory  be  controlled.  The 
federal  government  has  no  authority  over  many  of  the  questions 
raised  by  a  study  of  trusts,  while  the  state  governments  are  con- 
fined in  the  exercise  of  their  authority  to  their  local  jurisdictions. 
Such  a  condition  must  result  in  confusion  of  laws,  in  uncertainty 
of  procedure,  and  in  enabling  the  interstate  enterprises  which 
rest  upon  state  foundations  to  become  a  law  unto  themselves,  so 
far  as  'the  conduct  of  their  affairs  is  concerned.  Competition 
cannot  work  inequitably  under  such  conditions.  Justice  attends 
competition  only  when  competitors  stand  on  an  equal  footing. 
It  is,  therefore,  no  occasion  for  surprise  to  one  who  is  familiar 
with  the  present  condition  of  state  laws  upon  industrial  affairs 
that  small  and  localized  industries  should  find  themselves  at  a 
disadvantage  in  their  struggle  for  existence  with  the  great  com- 
binations. A  national  market  has  taken  the  place  of  the  local 
market,  but  we  still  rely  upon  local  law  for  its  regulation  and  con- 
trol. Uniformity  of  law  and  harmony  of  procedure  is  as  essen- 
tial as  uniform  railway  rates  and  absence  of  discrimination,  to 
restore  those  conditions  in  which  competition  can  effect  its  nor- 
mal and  beneficent  results. 

We  are  thus  carried  by  our  analysis  from  the  consideration 
of  economic  relations  to  the  stupendous  qiiestion  of  political 
organization  and  legislative  procedure.  He  who  believes  in  local 
government  will  not  readily  consent  to  the  proposition  that  the 
federal  Congress  should  assert  exclusive  authority  over  commer- 

39 


eial  and  industrial  conditions.  Nor,  on  the  other  hand,  will  he 
who  appreciates  the  significance  and  the  beneficent  results  of  a 
world's  market  consent  to  the  suggestion  that  the  business  trans- 
actions of  a  state  concern  should  not  extend  beyond  the  borders 
of  a  state.  Here  is  a  problem  for  statesmen  to  contemplate,  and  it 
is  possible  before  arriving  at  its  solution  that  the  constitutional 
relations  between  the  local  and  the  federal  government  will  be 
subjected  to  modification.  Without  entering  upon  this  phase  of 
the  subject,  may  I  submit  for  consideration  the  following  propo- 
sition: The  true  function  of  a  central  government  in  dealing 
with  problems  of  internal  economy  is  to  determine  the  funda- 
mental principles  of  legislation,  while  the  true  function  of  local 
government  is  to  express  those  principles  in  the  terms  of  local 
conditions  and  to  administer  the  laws  thus  expressed.  By  this 
means  harmony  of  action  at  least  would  be  secured  and  one  of  the 
conditions  out  of  which  industrial  combinations  spring  will  have 
been  set  aside. 

My  third  suggestion  in  explanation  of  the  persistence  of  com- 
binations in  industries  which  from  their  nature  are  subject  to 
competition  is  found  in  the  unsatisfactory  condition  of  state  laws 
of  incorporation.  This  is  a  question  that  should  be  considered 
by  a  lawyer,  but  by  the  lawyer  who  is  familiar  with  the  industrial 
history  of  the  English  speaking  people.  Originally  a  corpora- 
tion created  by 'the  state  was  regarded  as  an  arm  of  the  state. 
Individuals  were  clothed  with  some  degree  of  public  authority 
because  they  undertook  to  perform  what  were  regarded  as  public 
duties.  The  East  India  Company,  which  planted  an  empire,  is 
an  illustration  of  such  a  corporation.  The  modern  idea  of  a  cor- 
poration is  entirely  different.  It  is  regarded  merely  as  a  busi- 
ness organization.  I  have  not  time  to  discuss  this  abstruse  ques- 
tion, even  had  I  the  ability,  but  of  one  thing  I  am  confident :  The 
theory  of  law  which  now  prevails  respecting  industrial  corpora- 
tions should  be  so  changed  that  the  public  element  is  again 
brought  into  prominence.  Industries  should  be  classified,  and 
the  right  of  incorporation  granted  to  one  class  and  denied  to 
another,  and  special  restrictions,  if  not  constant  supervision, 
should  be  exercised  over  such  industries  as  are  incorporated  be- 
fore we  can  again  reintroduce  into  this  modern,  complex 
machine-organized  industrial  society  the  conditions  favorable  to 
the  normal  working  of  the 'beneficent  principle  of  competition. 

Whatever  may  be  said  upon  the  questions  thus  far  submitted, 
there  is  one  point  respecting  which  all  should  agree.  Industrial 
combinations,  whatever  their  form,  whatever  their  purpose,  what- 
ever their  explanation,  are  matters  of  public  concern.  It  is  said, 

40 


OFFICERS  OF  THE  CONFERENCE 


DUDLEY  G.  WOOTEN 
First  Vice-Chairman 

FRANKLIN  H.  HEAD 
Temporary  Chairman 

STEPHEN  P.  CORLISS 
Third  Vice-Chairman 


HENRY  V.  JOHNSON 
Second  Vice-Chairman 

WILLIAM  WIRT  HOWE 
Permanent  Chairman 

RALPH  M.  EASLEY 
Secretary 


we  do  not  know  enough  of  this  new  form  of  industrial  organiza* 
tion  to  judge  properly  respecting  it.  If  this  be  true,  and  if  on 
this  account  trusts  are  to  be  allowed  a  probationary  existence,  it 
is  the  plain  duty  of  government  to  hold  them  meantime  to  strict 
account.  The  statistician  should  be  pressed  into  service,  the 
keeping  of  books  should  be  regarded  as  of  paramount  importance, 
and  the  rule  according  to  which  accounts  are  kept  and  reports 
made  should  be  formulated  in  the  interest  of  investigation.  The 
propriety  of  this  suggestion  can  be  questioned  by  no  one.  If 
trusts  are  what  they  claim,  that  is  to  say,  the  vanguards  of  a  new 
industrial  organization  which  holds  within  itself  great  industrial 
benefits,  the  sooner  this  fact  is  recognized  by  the  public,  the  better 
for  all  concerned.  If,  on  the  other  hand,  there  is  danger  in  the 
extreme  application  of  this  form  of  organization,  the  government 
certainly  has  a  right  to  possess  itself  of  all  facts  necessary  for  a 
judicious  opinion  and  for  effective  legislation.  It  would  be  a 
step  in  the  right  direction  should  the  states  make  provision  for 
an  interstate  organization  of  statistical  inquiry  and  confer  upon 
such  an  organization  adequate  authority  for  the  uniform  prose- 
cution of  its  investigation.  Where  competition  controls,  the 
government  may  safely  refrain  from  interference,  but  where  com- 
petition is  excluded,  or  where  the  conditions  for  its  exercise  are 
such  as  to  give  one  competitor  an  advantage  over  another,  noth- 
ing remains  but  public  supervision;  and,  I  repeat,  the  most 
important,  indeed  the  essential  agency  for  legislation  or  for  ad- 
ministrative supervision  is  a  thoroughly  organized  bureau  of 
statistics  and  accounts  clothed  with  authority  over  the  auditing 
departments  of  these  industrial  associations. 

Permit  me  in  closing  to  pass  in  rapid  review  the  questions,  so 
far  as  they  have  been  presented,  which  underlie  the  problem  now 
claiming  your  attention.  It  was  first  suggested  that  industries 
differ  in  their  fundamental  character  and  that  no  wise  policy  can 
be  adopted  until  those  which  are  naturally  monopolistic  are  sepa- 
rated from  those  which  by  nature  are  subject  to  competitive  con- 
trol. It  was,  in  the  second  place,  suggested  that  before  a  reason- 
able opinion  could  be  entertained  respecting  trusts  their  relation 
to  prices,  to  commercial  depressions,  as  also  their  influence  upon 
democracy,  should  be  clearly  grasped.  Turning,  then,  in  the 
third  place,  to  a  consideration  of  the  current  tendency  toward 
monopoly  in  industries  which  naturally  are  subject  to  competi- 
tive control,  it  was  stated  that  the  explanation  of  this  tendency  is 
found  in  the  conditions  under  which  manufacturing  and  com- 
mercial enterprises  are  carried  on.  Three  of  these  conditions 
were  mentioned:  First,  the  fact  that  railways  do  discriminate 

41 


in  favor  of  large  shippers;  second,  that  the  extension  of  coin  me  r- 
cial  relations  beyond  the  jurisdiction  of  the  states  has  resulted  in 
confusion  of  law  and  uncertainty  of  procedure — a  condition  espe- 
cially favorable  to  the  encouragement  of  great  interstate  indus- 
tries; third,  attention  was  called  to  the  unsatisfactory  condition 
of  the  laws  of  incorporation  as  one  of  the  elements  in  the  condi- 
tions by  which  trusts  are  fostered.  And  finally,  your  attention 
was  called  to  the  fact  that  whatever  else  may  be  determined  upon, 
provision  should  be  made  by  the  states  for  an  efficient,  compre- 
hensive and  harmonious  control  over  the  auditing  departments  of 
such  industries  as  choose  the  trust  organization  for  the  prosecu- 
tion of  business. 

The  question  before  this  convention  is  indeed  a  great  ques- 
tion. It  moves  in  many  directions  and  embraces  many  considera- 
tions. It  is  at  bottom  a  question  of  social  theories  and  social 
ideas.  Its  vastness  will  be  appreciated  when  it  is  observed  that 
its  judicious  treatment  will  result  in  securing  for  the  people  the 
advantages  of  the  industrial  development  of  the  past  century, 
while  to  ignore  it  or  to  fail  in  its  solution  would  result  in  prosti- 
tuting the  wealth  created  by  an  hundred  years  of  phenomenal 
development  to  the  service  of  a  class. 

DUDLEY  G.  WOOTEK 

Member  Texas  Legislature. 

At  the  conclusion  of  Professor  Adams'  remarks,  the  chairman 
introduced  Hon.  Dudley  Goodall  Wooten,  of  the  Texas  Legisla- 
ture. Mr.  Wooten  was  the- first  speaker  on  the  uncompromising 
anti-trust  side  of  the  debate.  The  gallery  audience  was  in 
sympathy  with  his  views,  and,  carried  away  by  the  eloquence  of 
the  gifted  orator,  punctuated  his  address  with  salvo  after  salvo 
of  applause.  Mr.  Wooten  said: 

The  delegates  from  Texas  are  highly  sensible  of  the 
honor  of  having  one  of  their  number  called  upon  to  address 
this  learned  and  representative  body  upon  the  first  day  of  its 
assembling.  It  is  I  believe  understood  that  this  day's  session 
shall  be  devoted  to  a  general  discussion  of  the  problems  under 
consideration,  leaving  to  the  subsequent  proceedings  of  the 
Conference  the  detailed  and  special  examination  of  the  various 
phases  of  the  subject.  I  therefore  feel  less  hesitation  in  respond- 
ing to  the  call  made  upon  me  at  this  time,  and  in  the  remarks 

42 


that  I  shall  endeavor  to  submit  I  shall  attempt  to  merely  present 
in  outline  and  in  general  terms  the  views  entertained  by  my  peo- 
ple. In  what  I  shall  say  I  make  no  pretense  of  discussing  Trusts 
and  Monopolies  from  the  standpoint  of  an  economic  expert,  but 
prefer  rather  to  address  myself  to  the  broad  features  of  these 
combinations  and  the  principles  that  seem  to  me  to  underlie  their 
causes,  promote  their  consequences,  and  must  accomplish  their 
reformation  or  removal. 

We  come  from  a  state  whose  location,  area,  resources  and 
population,  in  our  judgment,  entitle  us  to  entertain  very  positive 
and  pertinent  convictions  upon  the  great  problems  that  have 
called  this  assembly  together,  and  which  will  hereafter  provoke 
the  learned  discussions  of  the  distinguished  gentlemen  here  pres- 
ent. First  of  all,  we  are  mainly  producers  of  raw  materials  and 
consumers  of  manufactured  products,  and  whatever  tends  to  ar- 
bitrarily control  the  prices  of  the  one  or  to  monopolize  the  output 
of  the  other  is  a  direct  injury  to  our  people  and  their  industrial 
pursuits.  In  the  next  place,  aside  from  the  material  aspects  of 
the  subject  as  affecting  the  markets  in  which  we  buy  and  sell, 
we  believe  that  there  is  a  fundamental  principle  of  political  ethics 
and  governmental  science  involved  in  the  problems  under  discus- 
sion. "We  believe  that  there  are  some  things  more  valuable,  more 
to  be  desired  and  more  worthy  to  be  contended  for  by  a  free  people 
than  mere  industrial  activity,  commercial  progress  or  the  accumu- 
lation of  worldly  wealth.  We  do  not  believe  in  that  school  of 
political  philosophy  that  despises  the  wisdom  and  experience  of 
the  fathers  of  English  and  American  liberty  and  law,  that  rejects 
as  antiquated  and  inadequate  the  great  precepts  and  principles  of 
a  venerable  jurisprudence  at  the  behest  of  modern  monopoly,  that 
salves  the  wounds  of  freedom  with  the  oil  of  avarice,  and  con- 
dones a  constitutional  crime  with  the  argument  of  pelf  and  greed. 

In  the  Constitution  under  which  we  in  Texas  live — handed 
down  to  us  by  the  heroes  of  the  Alamo  and  San*  Jacinto — we  are 
taught  that  "monopolies  are  contrary  to  the  genius  of  a  free  gov- 
ernment, and  shall  never  be  allowed";  and  we  adhere  with  unhesi- 
tating loyalty  to  both  the  letter  and  the  spirit  of  that  declaration. 
In  the  Federal  Constitution  under  which  we  all  live — handed 
down  to  us  all  by  the  heroes  of  Lexington  and  Saratoga  and  York- 
town — we  have  been  taught  that  "all  rights  not  delegated  to  the 
United  States  nor  prohibited  to  the  States,  are  reserved  to  the 
people" ;  and  among  the  most  valuable  of  those  reserved  rights  we 
esteem  the  traditional  freedom  of  trade,  contract  and  labor  that  has 
been  cherished  and  defended  by  Anglo-Saxon  yeomen  in  every  age 
since  their  history  began.  ISTay,  mere  than  that,  Mr.  Chairman, 

43 


accepting  in  good  faith  that  Amendment  to  the  Federal  Constitu- 
tion which  the  heroic  legions  of  the  South  resisted  unto  death  on 
a  thousand  battlefields,  we  believe  that  "neither  slavery  nor  invol- 
untary servitude,  except  as  punishment  for  crime,  shall  exist  in 
the  United  States  or  any  place  subject  to  their  jurisdiction";  and 
we  confidently  Assert  that  the  commercial  and  industrial  bondage 
being  rapidly  imposed  upon  the  toil  and  talents  of  seventy  mil- 
lions of  American  citizens  by  the  syndicated  wealth  of  a  few  great 
corporate  monopolies,  is  more  dire  and  dangerous  than  the  slavery 
that  once  bowed  the  heads  and  burdened  the  backs  of  four  mil- 
lions of  Southern  black  men. 

And  above  and  beyond  these  great  written  guarantees  of  equal- 
ity and  justice,  we  look  to  the  lessons  of  history  and  appeal  to  the 
authority  of  experience.  When  we  are  told  that  the  spirit  of 
commercial  combination  promises  golden  rewards  to  the  present 
tendencies  of  our  economic  system,  we  remember  that  no  republic 
has  ever  survived  the  mercenary  despotism  of  merchants  and 
money-changers.  We  recall  the  fate  of  that  little  group  of  Ital- 
ian states  whose  political  institutions  were  wrecked  by  the  touch 
of  commercial  greed  and  whose  republican  freedom  vanished  be- 
fore the  breath  of  commercial  ambition.  Their  glittering  frag- 
ments strewed  the  shores  of  the  Mediterranean  like  shattered 
baubles  as  soon  as  their  commerce  became  mightier  than  their 
constitutions,  and  their  shipping  more  potent  than  their  states- 
manship. We  recollect  that  from  the  day  the  Saxon  set  his  sway 
on  British  shores,  through  all  hi?  successive  conquests  and  assimi- 
lations of  Celtic,  Danish  and  Norman  invaders,  the  one  virtue 
that  made  him  strong  and  kept  him  free  and  proved  him  trium- 
phant was  his  invincible  loyalty  to  the  genius (of  that  liberty  that 
springs  from  the  soil  and  that  civilization  that  centers  in  the 
rights  and  aspirations  of  the  individual  man.  And  we  reflect  to- 
day that,  although  the  sails  of  imperial  Britain  whiten  every  sea, 
while  her  commercial  activity  stirs  every  port  and  dominates  half 
the  globe,  yet  she  has  preserved  the  immemorial  virtues  of  her 
Saxon  lineage.  The  source  of  all  her  strength  and  the  citadel  of 
all  her  civilization  are  still  housed  beneath  the  roofs  of  her  sturdy 
yeomanry,  proud  of  their  natural  rights  and  tenacious  of  their 
inherited  freedom.  The  commerce  of  the  world  has  made  her 
glorious  and  rich,  but  the  independent  citizenship  of  her  personal 
subjects  sustains  the  fabric  of  her  national  power, — 

"Broad  bas'd  upon  her  people's  will, 
And  compass'd  by  the  inviolate  sea." 

Coming  to  this  Western  World,  we  remember  the  fortitude 
and  sagacity  that  founded  this  republic  upon  the  same  great  tra- 

44 


tiitions  of  civil  and  political  rights  that  had  glorified  the  centuries 
of  English  constitutional  growth,  but  framed  its  institutions 
along  yet  broader  and  freer  lines.  We  love  to  recall  that  Wash- 
ington warned  his  countrymen  against  the  dangerous  seductions 
of  commercial  power  and  the  corrupting  influence  of  consuming 
wealth ;  that  he  commended  to  them  the  frugal  methods  and  easy 
paths  of  individual  enterprise,  and,  with  his  last  breath,  bade 
them  beware  the  encroaching  tyranny  of  ambitious  greed.  We 
admire  the  intrepid  radicalism  and  daring  democracy  of  Jeffer- 
son when  he  proclaimed  that  he  "would  rather  see  the  whole  earth 
reduced  to  a  single  pair  and  them  free,  than  to  behold  a  populous 
world  groaning  beneath  the  exactions  of  privileged  monopoly." 
We  recollect  that  the  elder  Adams  said  that  "the  highest  ideals 
of  political  perfection  are  not  compatible  with  the  selfish  stan- 
dards of  material  prosperity,"  and  that  Webster  declared  that 
.  "the  deadliest  canker  that  can  attack  the  heart  of  the  nation  is 
the  corroding  disease  of  commercial  avarice." 

Line  upon  line  and  precept  upon  precept  this  cumulative  creed 
of  political  philosophy  comes  down  to  us  from  the  lips  and  lives  of 
all  our  sages,  heroes  and  statesmen,  and  is  verified  in  every  step 
and  stage  of  our  national  career. 

In  the  face  of  such  lessons  and  such  authority  we  must  be  per- 
mitted to  dissent  from  the  academic  arguments  that  seek  to  reason 
away  our  faith  and  history,  and  to  repudiate  utterly  the  scholastic 
speculation  that  would  silence  the  voices  of  our  wisest  patriots 
and  reverse  the  judgments  of  our  soundest  jurists.  The  academic 
element  has  never  been  friendly  to  practical  freedom  nor  con- 
tributed sensibly  to  the  solution  of  any  great  social  or  political 
problem,  and  its  attitude  in  this  discussion  is  in  line  with  its 
historic  assumption  of  authority  without  wisdom  and  counsel 
without  sympathy. 

Kemembering  and  revering  these  ancient  and  approved  prin- 
ciples and  precepts,  we  must  be  allowed  to  believe  that  the  mod- 
ern trust  and  its  more  modern  successor — the  consolidated  corpo- 
rate monopoly — are  the  practical  realization  of  the  commercial 
spirit  in  its  most  despotic  form;  that  they  represent  in  crystall- 
ized and  perfected  triumph  the  concentrated  evils  that  have  been 
resisted  by  our  ancestors  and  denounced  by  our  laws  and  tradi- 
tions since  Anglican  freedom  had  its  birth  and  American  institu- 
tions began  their  growth. 

Developing  under  the  frown  of  judicial  disfavor,  the  modern 
trust  has  passed  from  the  loose  and  imperfect  combination  of 
affiliated  corporations  until  it  issues  in  the  condensed  and  con- 
solidated union  of  huge  capitalized  monopolies  under  one  charter 

45 


and  a  centralized  control.  Their  fundamental  purposes  are  to 
reduce  expenses  by  lowering  the  prices  of  raw  materials,  minimiz- 
ing the  cost  of  labor,  and  concentrating  the  expenditure  of  energy 
into  the  smallest  possible  compass;  to  destroy  competition  by 
absorbing  all  rival  industries,  squeezing  out  the  small,  coercing 
the  weak  and  amalgamating  the  strong;  to  monopolize  and  con- 
trol trade  and  industry  by  absolutely  dominating  the  market  and 
subsidizing  or  terrorizing  the  free  and  normal  course  of  com- 
merce, transportation  and  labor.  These  are  the  avowed  and 
undisguised  objects  of  every  great  manufacturing  and  commercial 
syndicate  of  the  age.  They  seek  to  justify  their  operations  on 
the  plausible  ground  that  they  improve  the  quality  and  increase 
the  quantity  of  manufactured  products,  reduce  the  prices  to  the 
consumer,  save  money,  time  and  labor  to  the  customer,  and  add 
to  the  aggregate  wealth  and  prosperity  of  the  country.  It  might 
be  admitted  for  the  sake  of  argument  that  some  of  these  conten- 
tions are  true,  while  the  monopoly  is  perfecting  the  machinery  of 
its  despotism,  but  ultimately  none  of  them  is  true  or  possible  in 
the  nature  of  things.  But  suppose  some  of  these  things  to  be  cor- 
rectly stated;  are  there  no  other  factors  to  be  considered  in  the 
problem?  At  what  and  whose  expense  are  these  much  praised 
results  attained?  At  the  expense  of  the  producer  of  the  raw 
materials,  whose  products  are  forced  upon  the  market  at  ruinous 
prices;  at  the  expense  of  discharged  employees  and  laborers, 
whose  places  are  filled  by  fewer  hands  or  improved  machinery, 
whose  wages  cease,  whose  families  must  starve  or  steal  or  join  the 
great  army  of  tramps  and  paupers,  whose  crimes  and  penury  are 
the  shame  and  the  menace  of  the  republic;  at  the  expense  of  the 
toil  and  enterprise  of  every  honest  competitor,  who  is  driven  out  of 
business  by  the  combination  or  closed  up  by  forcible  absorption ; 
at  the  expense  of  every  customer  who  is  compelled  to  handle  the 
trust  goods  upon  arbitrary  terms  and  at  such  profits  as  the  syndi- 
cate may  prescribe;  at  the  expense  of  the  entire  public,  which  is 
sooner  or  later  left  no  choice  but  to  submit  to  such  exactions  as 
the  triumphant  monopoly  may  dictate.  And  who  is  benefited 
thereby?  The  few  fortunate  employees  who  are  able  to  retain 
their  employment  under  the  new  system;  the  speculators  in  the 
watered  stock  that  was  floated  at  the  inception  of  the  enterprise 
and  which  has  become  valuable  by  the  manipulations  of  the 
monopoly;  and  the  limited  number  of  promoters  who  have 
amassed  millions  of  money  by  the  scheme  that  defrauded,  impov- 
erished and  enslaved  millions  of  men.  Wealth  and  prosperity 
and  a  limited  degree  of  happiness  have  perhaps  blessed  a  few  sel- 
fish incorporators  and  their  more  selfish  families,  while  poverty, 

46 


discontent,  despair  and  the  bitterness  of  ruined  hopes  and  homes 
have  darkened  the  minds  and  desolated  the  hearts  of  countless 
thousands  of  honest,  industrious,  aspiring  citizens  of  a  free 
republic. 

This  is  merely  the  material  side  of  the  picture,  but  to  describe 
it  is  to  announce  it  as  a  drama  of  wrong  and  woe.  I  say  nothing 
of  the  grievous  injustice  and  inequality  of  any  political  system 
that  permits  such  a  monstrous  perversion  of  all  the  traditions  of 
our  liberties  and  laws.  To  recite  the  outlines  of  English  and 
American  constitutional  history  is  to  denounce  in  every  line  and 
landmark  the  whole  origin,  operation  and  consequences  of  the 
modern  commercial  and  industrial  trust. 

Entertaining  as  we  do  these  deliberate  and  decided  convic- 
tions, there  is  in  our  view  of  the  matter  but  one  phase  of  the  prob- 
lem left  open  for  discussion,  and  that  is  how  best  to  remedy  the 
evil  and  remove  its  causes.  Upon  this  branch  of  the  subject  there 
may  well  be  differences  of  opinion  among  those  otherwise  agreed 
upon  the  propositions  just  advanced.  When  we  come  to  devise 
and  to  "enforce  remedies  against  these  disastrous  agencies,  we 
confront  a  difficult  and  delicate  question  of  both  law  and  fact. 
It  involves  vested  rights,  the  obligations  of  contract,  the  im- 
munities and  privileges  of  citizenship,  and  the  intricate  mechan- 
ism of  trade  and  economics.  But  these  are  mere  details  of 
method  and  reform.  We  prefer  at  this  time  to  brush  them  aside 
and  go  direct  to  the  heart  of  the  subject.  If  we  may  find  the 
germs  that  give  vitality  to  the  whole  system  of  syndicated  mon- 
opoly and  combined  capital,  it  ought  to  be  possible  to  contrive 
means  for  their  extermination  or  control. 

The  courts  of  the  country  have  uniformly  and  correctly  held 
that,  but  for  the  existence  and  methods  of  private  corporations, 
trusts  and  monopolies  in  their  present  form  could  not  exist  for  an 
hour.  The  loose  and  risky  methods  of  personal  enterprise,  the 
legal  limitations  and  vicissitudes  of  individual  investments,  and 
the  motives  of  selfish  caution  that  control  the  actions  of  men  or 
firms  engaged  in  business  on  their  own  responsibility,  all  render 
it  impossible  for  great  industrial  and  commercial  monopolies  to  be 
built  up  in  that  way.  It  is  only  by  the  corporation,  with  its 
peculiar  and  artificial  attributes,  that  trusts  and  trade  combina- 
tions can  be  successfully  carried  out.  Here,  then,  we  have  the 
root  of  the  evil,  and  here,  too,  we  are  again  confronted  with  a 
profound  question  of  political  and  governmental  science.  It 
has  been  said  that  this  question  of  trusts  is  not  a  political  ques- 
tion. We  beg  to  say  that  it  is,  of  all  other  questions  of  the  age, 
fundamentally  and  essentially  a  political  one,  Its  discussion  and 

47 


solution  involve  the  vitals  of  our  whole  political  system  and  insti- 
tutions. They  are  inseparably  connected  with  the  first  principles 
and  practical  philosophy  of  republican  government. 

The  trust  and  its  parent,  the  private  corporation,  are  radically 
opposed  to  that  individualism  whose  full  and  free  exercise  i?  the 
basis  of  all  democratic  forms  of  government.  The  predicate 
upon  which  are  laid  the  whole  theory  and  argument  of  the  Declar- 
ation of  Independence  and  the  provisions  of  our  Constitutions, 
state  and  federal,  is  the  inalienable  and  indestructible  sovereignty 
of  individual  manhood  and  natural  citizenship.  When  it  is  de- 
clared that  "All  men  are  created  free  and  equal,  and  endowed 
with  certain  inalienable  rights,"  we  are  to  understand  natural 
men,  with  the  sentiments,  sympathies,  aspirations,  hopes  and 
limitations  of  human  nature.  When  it  is  said  that  all  rights  not 
otherwise  disposed  of  in  the  Constitution  are  "reserved  to  the 
people,"  we  must  believe  that  the  fathers  of  the  Union  meant  a 
real  people,  created  by  Divine  power,  embodying  the  instincts, 
attributes  and  capabilities  breathed  into  man  by  his  Maker — 
loving  freedom,  despising  despotism,  responsive  to  the  impulses 
of  patriotism,  bound  by  the  ties  of  gratitude  and  the  motives 
of  generosity,  dutiful  to  the  obligations  of  humanity  here  and 
conscious  of  an  everlasting  responsibility  hereafter.  Upon  no 
other  kind  of  foundation  can  a  free  and  stable  government  stand ; 
of  no  other  kind  of  citizenship  can  a  prosperous  republic  be  com- 
posed. 

And  yet,  within  the  past  fifty  years,  there  has  grown  up  under 
the  sanction  of  the  Constitution  and  with  the  approval  of  the 
courts,  congresses  and  legislatures,  a  new  and  dangerous  innova- 
tion upon  the  original  conceptions  of  the  framers  of  our  institu- 
tions. Side  by  side  with  the  natural  man  created  by  God,  there 
has  arisen  an  artificial  person,  conceived  by  the  mischievous 
ingenuity  of  mercantile  greed,  created  by  the  capricious  loa:isla- 
tion  of  human  assemblies,  protected  by  the  fictions  of  fallible  tri- 
bunals, vested  with  practical  immortality,  endowed  with  every 
attribute,  power  and  function  that  may  belong  to  the  natural  per- 
son, and  exempt  from  every  limitation,  influence  and  restraint 
that  render  human  nature  honest,  charitable,  generous  and  con- 
scientious. And,  worst  of  all,  by  the  verv  natiire  of  their  consti- 
tutions and  the  opportunities  of  their  artificial  methods,  and  the 
capacity  which  they  enjoy  for  indefinite  combinations  of  power 
and  illimitable  acquisitions  of  wealth,  these  cold  and  calculating 
creatures  of  the  law,  though  few  in  numbers  as  compared  with  the 
mighty  mass  of  the  true  citi/enship  of  the  country,  have  been 
enabled  to  engross  the  bulk  of  the  national  resources,  to  dominate 

48 


the  popular  will,  and  to  dwarf  and  paralyze  the  sovereignty  of  the 
individual  manhood  of  the  republic. 

Forty  years  ago  Abraham  Lincoln  declared  that  this  republic 
could  not  exist  "half  slave  and  half  free/'  and  the  titanic  struggle 
of  a  four  years'  war  vindicated  the  prophetic  wisdom  of  his 
declaration. 

Would  that  some  second  Lincoln  could  arise,  with  the  sublime 
courage  and  majestic  patriotism  of  that  splendid  seer,  to  tell  this 
generation  of  Americans  that  the  Union  .cannot  endure  nor  its 
freedom  be  insured  half  composed  of  natural  citizenship  and  half 
of  artificial  citizenship.  Nay,  the  condition  is  even  worse  than 
that.  Under  the  sinister  conditions  brought  about  by  the  inordi- 
nate growth  and  overshadowing  power  of  private  corporations, 
the  division  is  not  even  in  equal  portions,  for  the  government- 
created  citizens  completely  dominate  their  natural  rivals  and 
crush  out  the  divinity  and  the  manhood  of  the  individual  sover- 
eigns of  the  nation.  Not  satisfied  with  the  inequality  that  arises 
from  the  very  nature  of  these  artificial  creatures  of  law  and 
license,  the  government  itself  has  established  and  maintained  a 
system  of  tariff  laws  avowedly  framed  for  the  especial  benefit  of 
these  unnatural  giants  of  commerce  and  industry.  The  artificial 
immunities  and  franchises  conferred  upon  corporate  citizenship 
by  legislation  and  judicial  favor  have  been  supplemented  by  the 
protective  duties  levied  and  enforced  for  the  purpose  of  enriching 
incorporated  monopoly  at  the  expense  of  the  independent  and 
unprotected  industries  of  personal  enterprise.  The  tariff  has 
enabled  the  corporations  to  establish  and  solidify  their  despotism 
by  forty  years  of  legalized  plunder  of  the  people,  and  to-day  it 
hides  behind  them  as  behind  t;he  breastworks  its  own  iniquities 
have  erected. 

It  is  along  these  lines  that  all  efforts  to  curtail  and  control 
trusts  and  monopolies  must  be  directed  in  our  judgment.  The 
germ  of  the  syndicated  system  is  the  private  corporation  and  its 
favored  privileges,  and  these  must  be  shorn  of  their  hurtful  power. 
Legislation  of  a  radical  kind  is  necessary,  and  the  nature  of  our 
governmental  institutions  points  the  way  for  proper  and  effective 
lows  on  this  subject.  Our  government  is  a  dual  system,  partly 
federal  and  partly  state,  and  all  action,  to  be  practical  and  success- 
ful, must  comprehend  a  harmonious  co-operation  of  both  the  fed- 
eral and  the  state  authorities.  In  the  economy  contemplated  by 
the  founders  of  the  republic  it  was  intended  that  where  the  states 
failed  by  reason  of  local  restrictions,  the  federal  power  should  sup- 
plement their  sovereignty  over  all  matters  of  universal  concern, 

49 


and  this  problem  calls  for  the  highest  and  widest  exercise  of  all 
the  jurisdiction  of  the  states  and  the  Union. 

The  great  bulk  of  the  commercial  traffic  and  industrial  trade 
of  the  union  is  interstate  commerce,  subject  to  the  jurisdiction  of 
the  federal  government  alone,  and  subject  also  to  the  jurisdiction 
of  the  federal  courts  by  reason  of  the  diverse  citizenship  of  the 
parties  engaged.  Properly  speaking  the  whole  subject  of  corpo- 
rations engaged  in  interstate  business  ought  to  be  under  the  con- 
trol of  the  federal  authority  for  that  reason,  but  in  order  to 
accomplish  that  end  there  must  first  be  concert  of  action  and  har- 
mony of  policy  and  sentiment  on  the  subject.  For  the  several 
states  to  do  anything  effective  and  valuable  they  must  co-operate. 
If  there  be  need  for  uniform  statutes  on  marriage  and  divorce, 
wills,  insolvency  and  other,  similar  interests  in  which  the  entire 
country  has  a  common  and  identical  share,  then  certainly  there  is 
need  for  it  on  this  the  most  vital  question  that  affects  the  pros- 
perity, happiness  and  freedom  of  the  republic  at  large.  It  was 
this  consideration  that  induced  the  governor  of  Texas  to  call  the 
meeting  of  governors  and  attorney-generals  which  will  convene  in 
St.  Louis  next  week,  and  it  is  to  be  hoped  that  some  harmonious 
and  united  plan  of  legislation  will  be  agreed  upon  by  them.  If 
we  are  asked  along  what  lines  this  universal  and  uniform  legisla- 
tion shall  be  framed,  then  we  unhesitatingly  answer  that  it  should 
be  in  the  direction  of  limiting  the  purposes  for  which  private  cor- 
porations shall  be  chartered,  so  as  to  reduce  their  number,  and  by 
limiting  also  the  amount  of  capital  stock  for  which  a  company 
may  be  incorporated  so  as  to  curtail  their  enormous  power  to 
amass  undue  wealth  and  exercise  despotic  control  over  the  com- 
merce, industry  and  policies  of  the  nation. 

It  is  one  of  the  most  alarming  symptoms  of  the  age  that  no 
sort  of  private  enterprise  can  be  inaugurated  without  the  artificial 
aids  of  incorporation.  The  original  and  normal  purpose  for 
which  corporations  were  intended  was  to  enable  those  things  to  be 
done  that  were  of  such  magnitude  that  individual  effort  and  capi- 
tal could  not  successfully  manage  them,  and  yet  were  of  such 
utility  and  public  importance  as  to  be  proper  and  desirable  to 
exist.  In  other  words,  they  were  only  meant  for  enterprises  of  a 
quasi-public  character.  Corporations  for  private  profit  are  in 
themselves  essentially  vicious  and  inconsistent  with  that  equality 
of  right  and  absence  of  special  privilege  guaranteed  by  the  insti- 
tutions of  a  free  republic,  but  if  they  must  exist  then  they  should 
be  limited  to  as  few  purposes  as  possible,  and  their  capital  stock 
should  never  be  beyond  that  which  a  .fair  and  reasonable  conduct 
of  private  business  requires.  It  is  folly  to  complain  of  trusts  and 

50 


suppress  pools  and  combinations  between  several  corporations, 
and  at  the  same  time  permit  the  formation  of  single  corporations 
with  larger  capital  than  any  syndicate  yet  known.  The.  fact  is  all 
such  consolidated  corporate  enterprises  are  simply  trusts  in  dis- 
guise, they  are  so  declared  by  the  recent  Texas  statute,  and  they 
ought  to  be  rendered  impossible  by  allowing  no  company  to  be 
chartered  for  any  other  than  a  quasi-public  purpose  with  a  capital  • 
authorized  beyond  a  reasonable  amount  commensurate  with  the 
equality  between  natural  and  artificial  citizenship  and  industry. 
These  are  the  lines  along  which  we  believe  that  the  remedy  .lies, 
so  far  as  the  states  can  furnish  and  apply  that  remedy. 

But  the  burden  of  this  great  work  can  not  and  ought  not  to 
be  thrown  entirely  upon  the  states.  Notwithstanding  the  high 
authority  of  the  attorney-general  of  the  United  States  and  his 
presumable  familiarity  with  trusts  in  their  natural  habitat,  we 
believe  that  the  federal  government  both  can  and  should  assume 
the  initiative  in  the  movement  to  suppress  and  restrain  these 
great  corporate  monopolies.  First  of  all,  it  can  and  should  dis- 
solve the  iniquitous  partnership  that  exists  between  trusts  and 
syndicated  wealth,  by  abolishing  the  tariff  system  that  has  been 
the  most  prolific  and  profitable  adjunct  the  trusts  and  monopolies 
have  had  for  the  past  thirty-five  years.  It  is  useless  and  dishonest 
to  denounce  these  oppressive  and  unjust  combinations  and  aggres- 
sions on  the  part  of  commercial  and  industrial  capital,  while  the 
government  itself  is  promoting  and  sustaining  them  by  its  revenue 
system  and  adding  to  their  strength  by  the  legalized  plunder  of 
the  people.  The  day  that  witnesses  the  withdrawal  of  the  sus- 
taining arm  of  the  federal  tariff  from  the  unlawful  combines  and 
trusts  of  the  country,  will  witness  the  most  signal  and  significant 
movement  possible  toward  their  extinction.  In  the  next  place, 
Congress  can  prevent  all  corporations  connected  with  monopolies 
and  trusts  from  engaging  in  interstate  commerce.  Of  this  power 
and  duty  on  the  part  of  our  federal  legislature  there  can  be  no 
question,  and  the  moment  it  is  exercised  the  main  support  and 
means  of  despotism  over  the  trade  of  the  union  by  these  combina- 
tions will  have  been  destroyed.  And  finally,  if  it  shall  become 
necessary  and  the  states  can  arrive  at  a  harmonious  and  united 
line  of  policy  on  the  subject,  the  federal  authority  can  assume 
entire  control  of  corporations  engaged  in  interstate  business, 
issuing  them  their  charters,  limiting  their  capital  stock,  curtail- 
ing the  purposes  for  which  they  may  exist  and  enforcing  upon 
them  the  most  rigid  and  exact  compliance  with  the  rights  of  the 
public  and  the  freedom  of  the  citizen.  This  no  doubt  might  re- 
quire an  amendment  to  the  Constitution,  but  if  that  is  the  only 

51 


way  the  desired  end  can  be  attained  the  people  will  eventually 
indorse  it. 

By  these  two  means — state  and  federal  legislation  combining 
to  reduce  the  number,  power  and  privileges  of  private  corpora- 
tions— the  rapid  growth  and  menacing  tyranny  of  the  corporate 
monopolies  can  be  controlled  and  restrained,  but  in  no  other  that 
we  can  perceive.  The  methods  suggested  may  apnear  radical  and 
revolutionary  to  some,  but  the  time  has  come  when  the  country 
must  face  the  crisis  and  solve  it  conscientiously,  courageously  and 
completely,  unless  we  are  to  surrender  those  principles  for  which 
the  union  was  formed  and  without  which  it  is  not  worth  preserv- 
ing. The  qualities  of  all  others  required  in  this  conflict  between 
the  just  and  equal  rights  of  the  masses  against  the  classes,  be- 
tween the  independent  freedom  of  individual  enterprise  and  cor- 
porate monopoly,  between  republican  institutions  of  liberty  and 
law  and  syndicated  combinations  of  mercenary  power,  are  the 
qualities  for  which  our  ancestors,  English  and  American,  have 
always  vindicated  their  characteristic  loyalty.  Devotion  to  man- 
hood rather  than  money,  to  the  principles  of  freedom  and  free 
institutions  rather  than  a  servile  worship  of  mere  material  ideals, 
to  the  fundamental  rights  of  the  citizen  in  his  personal  relations 
rather  than  the  grandeur  and  power  of  collective  might.  If  gov- 
ernment of  the  people,  by  the  people  and  for  the  people  is  to  con- 
tinue in  this  republic,  then  we  must  place  national  righteousness 
above  national  wealth,  ethics  above  economics,  political  principles 
above  pecuniarv  profit,  the  Constitution  above  the  commerce  of 
the  country.  To  do  these  things  at  this  time  and  under  the  over- 
shadowing menace  of  established  industrial  and  commercial  con- 
ditions will  require  a  degree  of  courage  and  constancy  never  be- 
fore demanded  by  any  crisis  that  has  arisen  in  the  history  of  the 
nation. 

The  glory  and  fascination  of  war  and  strenuous  struggle  for 
the  life  of  the  government  as  our  people  understood  it  have  made 
heroic  the  annals  of  the  past  and  shed  luster  upon  the  fortitude, 
loyalty  and  self-sacrifice  of  every  section  of  the  union.  But  in 
this  struggle  the  cold  and  calculating  spirit  of  avarice  and  artifi- 
cial ambitions  will  combat  the  patriotism  and  fidelity  of  the  peo- 
ple, the  seductions  of  wealth,  the  corruptions  of  mercenary  greed, 
the  pampered  power  of  government-created  and  government-pro- 
tected monopolies,  the  nlausible  arguments  of  scholastic  specula- 
tion and  the  sordid  schemes  of  venal  statesmanship  will  all  be 
arrayed  against  the  plain  and  practical  traditions  and  principles 
of  our  institutions  and  our  inherited  love  of  freedom  and  justice. 
So  far  as  the  men  of  my  state  are  concerned  they  are  ready  for  the 

52 


Conflict  and  will  not  be  found  to  falter  in  its  prosecution.  We 
have  not  forgotten  the  heroic  periods  of  our  own  history.  We 
remember  now  as  did  the  soldiers  of  San  Jacinto  the  splendid 
tragedy  of  the  Alamo  and  Goliad.  We  recall  the  names  of  our 
earlier  worthies,  and  as  we  recollect  how  they  faced  the  physical 
despotism  of  an  empire  in  arms  against  a  handful  of  hardy  pio- 
neers, we  are  not  afraid  that  our  citizenship  of  this  age  will  be 
less  sturdy  and  valiant  in  the  great  moral,  social  and  political 
battle  that  now  confronts  the  whole  Union.  Texas  will  make 
good  her  right  to  wear  the  heritage  of  her  illustrious  past,  and  will 
be  found  standing  by  the  side  of  all  the  states  in  the  endeavor  to 
rescue  the  labor  and  enterprise  and  freedom  of  our  whole  country 
from  the  paralytic  grasp  of  monopoly  and  greed. 

At  the  conclusion  of  his  remarks,  Mr.  Wooten  was  given  an 
ovation,  and  it  was  some  moments  before  the  chairman  was 
able  to  introduce  William  Fortune,  President  of  the  Indiana 
State  Board  of  Commerce,  who  made  an  earnest  plea  for  conserva- 
tive procedure  as  a  more  hopeful  course  than  the  application  of 
revolutionary  or  too  radical  measures  to  an  evolutionary  problem. 
He  suggested  the  danger  capital  may  bring  to  itself  by  heedless 
abuse  of  its  power,  and  indicated  the  importance  to  it  of  seeking 
proper  regulations  which  will  make  trust  methods  acceptable 
rather  than  obnoxious  to  the  people  by  whose  permission  and  tol- 
eration only  can  their  existence  continue.  His  speech  was  a  plea 
for  the  practicable  rather  than  theoretical  approach  to  the  subject, 
which,  in  its  present  stage,  the  speaker  believed  to  be  too  imma- 
ture to  give  basis  for  conclusive  judgment  as  to  the  extent  of  either 
its  harmful  or  beneficial  effects.  He  said  in  the  course  of  his  re- 
marks : 

WILLIAM  FOETUNE. 

President  Indiana  State  Board  of  Commerce. 

In  the  progress  of  civilization  we  have  advanced  step  by  step 
in  methods  of  co-operation.  In  various  ways  the  great  institu- 
tions of  the  world  have  been  wrought  by  union  of  effort.  The  in- 
stinct of  association  has  made  society,  the  sympathy  of  aspiration 
has  made  the  church,  appreciation  of  preparation  of  the  individ- 
ual for  the  duties  of  life  has  brought  to  us  our  educational  system, 
men  have  been  rallied  into  armies  to  fight  for  common  cause,  and 

53 


OH  tlic  demand  for  equal  rights  of  all  in  the  pursuit  of  happiness 
is  based  the  greatest  government  of  the  world.  These,  our  cher- 
ished institutions,  have  been  made  possible  by  methods  of  co- 
operation, and  patriots  do  not  cry  out  against  them,  but  well  we 
know  that  they  would  not  be  held  as  cherished  institutions  if 
there  was  aught  but  common  good  in  their  aims. 

Step  by  step,  the  tendency  for  ages  has  been  toward 
increase  of  organized  forces.  In  some  of  its  differentiations 
this  tendency  was  first  resisted,  then  encouraged  and  fos- 
tered as  a  rightful  means  of  advancing  human  welfare  where  the 
individual  suffered  from  single-handed  strife  against  the  com- 
petitive system.  The  evolution  of  organization  has  carried  us 
rapidly  through  different  forms  of  progress  and  co-operative  ben- 
eficence, all  of  which  we  have  regarded  with  more  of  approbation 
than  apprehension,  but  now  when  we  are  confronted  with  vast 
developments,  which  have  come  by  natural  processes  from  social, 
industrial  and  economic  tendencies,  we  awaken  to  the  discovery 
that  we  have  been  running  with  our  eyes  shut.  A  startled  cry 
of  danger  ahead  echoes  over  the  land,  and  in  the  first  flush  of 
excited  feeling  there  is  a  general  demand  from  the  people  for  pro- 
tective measures.  This  demand  comes  too  late  to  check  the  ten- 
dencies which  have  gathered  irresistible  force  from  the  sources 
of  their  rise  and  too  early  for  the  formation  of  unerring  judgment 
as  to  what  may  best  be  done.  For  the  instant  we  stand  as  helpless 
before  the  vast  problem  as  the  spectator  of  a  passing  cyclone.  We 
regard  it  with  alarm,  we  expect  to  find  destruction  and  wreckage 
in  the  path  it  sweeps,  but  we  know  that  all  will  not  fall  victims  to 
the  mighty  power  of  its  passing. 

A  pause  for  investigation  will  afford  the  best  preparation  for 
averting  whatever  may  be  the  dangers  of  the  future.  If  there  is 
good  cause  for  the  present  alarm  it  is  well  to  know  as  definitely 
as  possible  the  extent  of  the  harm  and  how  it  is  wrought.  When 
this  is  clearly  determined  we  will  know  better  what  to  do  to  eradi- 
cate the  evils  and  break  the  power  that  now  terrifies  ere  it  touches 
people.  The  clamor  raised  by  politicians  may  carry  them  into 
office,  but  too  often  it  has  no  other  result  to  warrant  faith  in  it  as 
a  means  of  solving  a  great  problem.  A  rush  of  legislation  is  apt 
to  be  as  ineffectual  as  the  premature  and  misdirected  fire  of  troops 
who  indiscreetly  attack  before  they  discover  the  position  and  force 
of  the  enemy.  Much  of  truth  may  be  revealed  or  indicated  in  the 
discussions  at  this  convention,  and  there  will  be  much  of  helpful 
thought  advanced  to  lead  the  way  to  sound  conclusions,  but  there 
is  risk  of  falling  into  serious  error  if  we  assume  that  at  this  stage 
of  approach  to  the  evolutionary  problem  before  us,  it  is  possible  to 

54 


know  all  that  should  be  known,  as  the  basis  of  an  adequately  com- 
prehensive doctrine  applicable  to  commercial  combinations. 

It  is  clear  that  there  is  both  good  and  evil  in  the  present 
operations  of  the  trust  scheme.  In  the  good  features  there  is 
enduring  vitality;  it  is  the  evil  that  the  people  will  seek  to  elimi- 
nate, and  there  is  nothing  surer  than  that  in  this  they  will  ulti- 
mately succeed.  Methods  of  co-operation  which  will  inure  fairly 
to  the  benefit  of  any  set  of  men  will  not,  when  understood,  be 
obnoxious  to  the  public ;  but  when,  through  selfishness  and  greed, 
there  is  a  perversion  of  these  methods  that  results  in  fraud,  in 
oppression  of  or  exactions  from  one  class  for  the  illegitimate 
advantage  of  another  class,  there  is  manifestly  need  for  the  exer- 
cise of  the  restraining  power  of  government  in  the  maintenance 
of 'equitable  relations  between  the  people.  Common  justice  and 
morality  demand  this.  A  government  by  the  people  will  not  fail 
to  protect  the  people  in  their  rights.  Dishonesty  in  capitalization 
and  practices  which  violate  good  morals,  must,  like  other  criminal 
acts,  be  brought  under  governmental  restraint.  It  will  be  folly 
to  undertake  reckless  warfare  for  the  annihilation  of  trusts,  but 
the  claws  of  the  monster,  if  that  it  be,  can  be  cut,  and,  under  the 
restraining  influences  of  good  regulations,  this  Behemoth,  biggest 
born  of  commerce,  may  become  a  docile,  harmless  and  really 
amiable  family  pet.  It  is  not  to  be  expected  that  regulations  can 
be  reasonably  established  which  will  eliminate  individual  hard- 
ships. We  know  that  economic  progress  has  ever  been  pitiless  in 
its  sacrifices,  and  that  in  its  conflict  with  human  industry  its 
advance  cannot  long  be  hindered.  This  humanitarian  cry  against 
the  individual  hardships  of  trusts,  however  distressing  it  may  be 
and  however  much  it  may  appeal  to  sympathy,  will  not  be  more 
effectual  than  has  been  the  outcry  for  the  same  reason  against 
labor-saving  machinery  and  methods.  It  is  not  clear  that  the 
power  of  regulation  can  be  effectively  exercised  in  any  other  way 
than  by  the  application  of  fundamental  moral  principles  for  the 
protection  of  rights  of  men  and  in  the  interest  of  public  policy. 
Economic  operation  is  in  itself  an  inexorable  law.  Theories  of 
revolutionary  effect  may  be  helpful  indications  of  what  may  ulti- 
mately come,  but,  in  wise  procedure,  the  first  steps  should  be  in 
the  direction  of  experimental  test  of  powers  that  have  served  us 
well  in  the  past.  More  radical  measures  will  come  if  necessary, 
but,  in  the  light  of  present  knowledge,  can  any  careful  thinker 
say  that  this  problem,  now  in  its  evolutionary  stages,  can  best  be 
solved  by  revolutionary  measures?  Is  it  not  better  to  patiently 
seek  to  apply  practicable  thought  to  the  correction  of  natural 
tendencies?  If  radical  measures  should  become  necessary  their 


success  will  be  hastened  by  preceding  failure  in  reasonable  efforts, 
as  history  proves  in  the  instances  of  great  changes  brought  about 
in  the  past.  A  wise  radical  is  first  a  patient  conservative. 

The  danger  now  most  gravely  apprehended  is  not  that  labor 
will  suffer  from  combinations  of  capital,  but  that  aggregated  capi- 
tal will  drive  out  of  competitive  channels  the  weaker  capital,  and 
that  commercial  monopoly  will  result  in  oppression  of  multitudes 
of  consumers  who  have  no  share  in  the  benefits  of  combinations. 
The  defensive  power  of  labor,  wisely  directed  through  organiza- 
tion, is  strong  enough  to  compel  capital  to  accord  to  it  the  share 
due  it.  There  is  a  nearer  approach  to  identity  of  interest  between 
the  two,  which  tends  to  bring  them  into  closer  relationship  as 
allies,  than  ever  before.  In  some  instances  a  primary  factor  in 
combinations  of  capital  has  been  to  compel  higher  prices  from  the 
consumer  to  enable  the  employers  to  pay  increased  wages  to 
employees.  The  unorganized  classes  who  are  consumers  and  who 
are  accorded  no  direct  benefits  from  the  allied  interests  of  com- 
binations, are  the  unprotected,  but  there  is  ultimate  safety  for 
them  in  their  numbers,  for  they  constitute  a  majority  of  the  peo- 
ple, and  if  they  move  in  alarm  to  demand  a  broader  application  of 
the  benefits  of  unity  it  must  be  perceived  that  there  are  possibili- 
ties ahead  which  have,  from  the  present  point  of  view,  chaotic 
aspects.  Labor  can  well  afford  to  view  the  situation  more  com- 
placently than  might  reasonably  be  expected  from  capital,  but  the 
pig  in  the  trough  is  always  unmindful  of  his  surroundings  while 
the  swill  holds  out. 

While  it  seems  that  manipulators  and  beneficiaries  of  trusts 
are  heedlessly  making  the  most  of  their  opportunities,  it  must  be 
recognized  that  these  opportunities  exist  by  permission  of  the 
people,  -and  abuses  can  continue  only  so  long  as  there  is  toleration 
of  them.  In  their  quick  development  they  have  grown  beyond 
established  restrictions.  It  must  be  recognized  that  they  spring 
from  ineradicable  conditions,  and  that  as  larger  developments  of 
economic  progress  they  have  the  elements  of  vitalitv  from  which 
civilization  has  derived  its  greatest  strength.  Shall  thev  be 
brought  under  the  regulations  which  we  have  sought  to  establish 
for  the  protection  of  society?  Shall  they  be  brought  under  the 
light  of  publicity  and  examination  so  that  the  good  and  bad  in 
their  tendencies  can  be  better  determined,  so  that  dishonesty  and 
unfairness  in  their  methods  mav  be  discovered,  so  that  the  in- 
equitable effects  of  their  operations  may  be  judged?  It  i?  the 
right  of  societv  to  know  if  this  new-born  creature  of  conditions  is 
hvimanity's  offspring  or  is  a  coiled  serpent.  If  it  is  of  us  and  for 
us  it  will  have  our  care,  but  it  should  be  brought  up  as  a  member 


of  the  family  in  the  way  it  should  go.  More  should  "be  known 
about  it  than  is  known  now;  it  should  be  studied  as  it  grows,  but 
at  all  times  it  should  be  required  to  conform  strictly  to  the  regula- 
tions which  preserve  good  morals  and  protect  the  rights  of  the 
majority.  It  seems  clear  enough  that  it  can  be  regulated;  it  is 
doubtful  if  it  can  be  deprived  of  existence;  we  do  not  know  that  it 
is  desirable  that  it  should  be  destroyed;  on  the  contrary,  the  con- 
ditions from  which  it  has  grown  have  brought  us  our  best  realiza- 
tions and  it  may  be,  when  perfected,  our  greatest  boon.  The 
darkness  of  ignorance  must  first  be  dispelled.  Only  those  who  are 
gifted  with  the  ready  assumption  of  prophecy  can  tell  us  all  that 
we  want  to  know,  and  however  interesting  this  may  be,  it  is  not 
competent  evidence.  We  know  enough  now  to  make  it  clear  that 
the  first  steps  should  be  in  the  direction  of  regulation,  and  as  we 
proceed  with  regulation,  study  the  development  of  the  problem. 
These  are  practicable  gradations  of  progress,  and  though  the 
promise  be  less  the  results  will  be  quicker  than  the  uncertain 
realization  of  Utopian  hopes  or  radical  demands/' 

JOHN  GRAHAM  BROOKS. 

Lecturer  University  of  Chicago. 

Mr.  Fortune  was  loudly  applauded,  as  was  also  Professor 
John  Graham  Brooks,  who  followed,  speaking  on  the  subject: 
"Are  the  New  Combinations  Socially  Dangerous?"  He  said: 

It  is  our  misfortune  that  no  opinion  upon  the  so-called  trust 
has  at  present  much  value.  The  movement  is  too  new — it  is  too 
vast,  it  is,  above  all,  too  undeveloped.  People  are  frightened  by 
the  new  phenomenon,  as  many  were  alarmed  a  century  ago  by  a 
quickened  tendency  of  business  to  pass  into  corporations.  The 
man  of  most  insight  at  that  time,  Adam  Smith,  thought  to  quiet 
the  unrest  by  saying  in  effect,  "Corporations  can't  do  much  harm 
because  only  a  few  simple  routine  branches  of  business  can  pos- 
sibly be  carried  on  bv  corporations.  People  won't  work  for  cor- 
porations as  they  will  work  for  themselves." 

His  ideal  was  the  old  common  partnership.  This  partnership 
was.  at  a  still  earlier  stage,  thought  to  be  very  dangerous.  Men  had 
hitherto  carried  on  business  alone  by  themselves.  The  partner- 
ship brought  them  into  a  common  organization.  People  then 
considered  this  a  "restraint  on  trade."  What  was  to  become  for- 
sooth of  manly  independence,  if  several  men  were  to  combine 
their  business  interests?  As  the  market  extended  and  finer  divi- 

57 


sion  of  labor  became  possible,  the  partnership  approved  itself  as 
the  necessary  agency  of  doing  business  under  the  new  conditions. 
But  the  partnership  finally  reached  its  limits  and  a  still  wider 
market  compelled  new  and  further  organization.  The  utter  un- 
fitness  of  the  old  partnership  has  now  grown  clear  to  the  slowest 
man  upon  the  street.  The  corporation  slowly  took  the  place  of 
the  partnership  for  an  enormous  part  of  the  world's  business. 
We  have  lived  to  see  a  large  part  of  the  world's  work  done  under 
corporate  form.  We  have  also  learned  that  for  nothing  will  men 
toil  harder  than  for  a  corporation.  At  the  close  of  this  century, 
the  instinct  toward  still  vaster  and  more  compact  organization  is 
everywhere  asserting  itself,  and  again  men  are  frightened.  Are 
there  signs  that  the  monster  is  dangerous  to  the  common  weal? 
It  would  be  very  simple-minded  to  answer  by  an  unqualified  yes, 
or  no.  We  do  not  say  a  corporation  is  good  or  bad  until  we  know 
what  the  corporation  is,  or  does.  If  the  business  is  properly  safe- 
guarded, the  corporation  renders  a  social  service  as  essential  as 
the  college,  the  library,  or  the  church.  If  the  larger  combina- 
tions, now  under  discussion,  can  be  so  far  controlled,  even  as  well 
as  a  large  part  of  Massachusetts  corporations  are  controlled,  I 
should  say  "  The  trust  is  not  to  be  feared,  but  to  be  welcomed." 
The  supreme  question  that  confronts  us,  is  that  of  possible  regu- 
lation. 

This  discussion,  if  it  is  to  help  us,  has  to  assume  one  moment- 
ous fact,  viz.,  the  pitiful  lack  of  anything  like  adequate  organiza- 
tion over  large  areas  of  industrial  life.  Several  great  primary 
industries  are  in  a  state  so  chaotic  as  to  affront  our  intelligence. 
The  extreme  clumsiness  of  organization,  both  in  production  and 
distribution,  has  thus  far  had  no  searching  investigation.  One 
gets  a  hint  of  it  when  he  sees  at  a  single  hotel  in  a  small  city  five 
drummers  competing  against  each  other  in  selling  the  same  prod- 
uct. I  have  heard  one  of  the  most  successful  business  men  in 
the  East  say,  "If  people  generally  knew  how  stupidly  and  waste- 
fully  much  of  the  large  business  is  carried  on,  we  should  become 
objects  of  ridicule."  Has  not  the  chairman  of  the  Interstate 
Commerce  Commission  himself  used  the  following  words  about 
railway  management? 

"I  undertake  to  say  that  if  the  worst  enemy  of  the  railroads 
Avhom  you  can  name  were  elected  President  of  the  United  States, 
and  if  he  should  pack. the  Interstate  Commerce  Commission  with 
the  worst  Populists  of  the  land,  those  men  would  never  dare  to 
do  the  reckless  and  indecent  things  which  the  managers  of  rail- 
roads themselves  have  done.  Can  you  name  any  five  men  so 
ignorant,  so  prejudiced,  so  inimical  to  the  common  interests  of  the. 

58 


country  that  they  would  upset  the  commerce  of  the  country  and 
demoralize  rates  and  business  in  the  way  the  railroad  men  have 
done  by  putting  in  force  the  rates  that  now  prevail  to  the  seaboard 
by  way  of  Galveston  from  the  Missouri  Kiver?  Would  they  let 
the  Missouri  Kiver  rate  be  as  low  as  the  Chicago  rate?  Would 
they  allow  flour  to  be  carried  from  Minneapolis  to  the  Atlantic 
cheaper  than  from  Chicago?  In  such  things  the  railroads  are 
making  a  fearful  misuse  of  their  power."' 

This  puts  no  slander  on  the  intelligence  of  the  managers;  it 
shows  the  pass  to  which  an  unregulated  competition  has  brought 
things.  What  boasting  there  has  been  about  the  marvels  of 
organization  in  insurance.  Yet,  I  have  heard  from  one  of  the 
foremost  men  in  that  business  this  criticism :  "It  would  not  be 
safe  to  have  it  known  how  badly  and  how  extravagantly  things 
are  managed,  or  to  what  sorry  shifts  we  are  driven."  I  asked  in 
this  city  a  very  prominent  insurance  man  if  this  were  fair  criti- 
cism, and  he  replied,  "Oh,  competition  has  got  us  now  where  the 
only  dress  we  ought  to  wear  is  the  cap  and  bells." 

It  would  be  silly  for  an  outside  observer  to  offer  opinions  like 
these.  I  am  therefore  careful  to  go  to  competent  and  unbiased 
authority.  On  the  avenue  in  which  I  live  in  Cambridge  there 
have  come,  at  the  same  time,  as  many  different  milk  concerns  as 
there  are  houses.  This  has  long  been  the  stock  illustration  of 
crude  and  preposterous  lack  of  method,  but  the  slightest  study  in 
detail  shows  that  scores  of  our  great  industries  have  crudities 
almost  as  grotesque.  To  the  extent,  then,  that  these  charges  are 
true,  I  submit  that  the  time  is  at  hand  for  some  kind  of  wide, 
thorough  and  effective  organization.  Nor  do  I  believe  it  open  to 
doubt,  that  the  immense  pressure  of  this  necessity  is  producing 
the  so-called  trust.  It  makes  itself  far  more  than  it  is  made. 
Men  will  fight  it  as  they  fought  machinery,  and  with  precisely  the 
same  results.  From  the  United  States  law  of  1890  to  the  various 
attempts  in  different  states  there  is  thus  far  no  hint  that  these 
colossal  forces  toward  new  organic  forms  can  be  hindered.  They 
can  be  made  worse,  as  in  the  anti-pooling  legislation.  They  can- 
not be  stopped.  I  believe  it  to  be  the  beginning  of  practical 
sense  to  understand  that  the  new  combinations  can  in  no  sense 
be  permanently  smashed.  The  party  which  proposes  to  do  this, 
in  the  sense  of  absolutely  checking  them,  will  have  plenty  of 
leisure  to  regret  it.  The  real  problem,  immediate  and  imperious, 
is,  how  to  regulate  and  guide  the  new  force  that  stands  merely  for 
the  latest  stage  of  industrial  growth.  If  the  combinations  are  to 
work  for  public  as  well  as  for  private  good,  three  things,  two  of 
them  now  largely  under  the  voters'  control,  must  be  brought 

59 


about:  (1)  As  absolute  a  publicity  of  methods  and  accounts ', 
(2)  Every  artificial  advantage  given  by  the  tariff  must  be  re- 
moved. Not  to  do  this,  is  to  allow  the  trust  to  play  against  the 
community  with  loaded  dice.  It  is  of  extreme  interest  that 
already  Canada  has  deliberately  deprived  monopolies  of  tariff 
protection.  One  of  the  chief  practical  dangers  at  the  present 
moment  is  that  the  public  will  be  drawn  away  from  the  possible 
uses  of  the  trust,  to  consider  far  too  exclusively  the  abuses.  The 
tariff  directly  and  powerfully  aggravates  those  abuses  and  thus 
adds  to  the  general  bewilderment.  Nor  do  I  mean  by  this  that 
the  tariff,  as  is  often  said,  causes  trusts.  The  proof  that  it  does 
not  is  that  free-trade  England  shows,  though  on  a  far  more  modest 
scale,  all  that  is  essential  to  these  combinations.  They  spring 
straight  from  the  new  conditions  of  an  intense  competition 
widening  into  a  world  market.  But  no  disinterested  person  will 
deny  that  a  high  tariff  strengthens  a  trust,  giving  it  a  power  that 
is  purely  artificial  and  one  not  depending  on  its  own  business 
merits.  This  difficulty  will  prove  less  formidable,  as  there  are 
plenty  of  signs  already  that  if  trusts  show  rapid  growth  they  will 
themselves  develop  the  most  powerful  antagonism  that,  the  tariff 
ever  has  met.  (3)  A  third  requisite,  just  as  vital,  is  that  railroad 
discriminations  shall  not  be  allowed  to  these  combinations. 
There  is  probably  no  difficulty  more  desperate  than  this.  No  one 
but  a  socialist  can  solve  it  with  gay  and  final  confidence.  But 
whatever  the  future  may  have  in  store,  we  are  not  yet  ready  for 
state  control  of  railways.  For  the  immediate  future  (a  decade  or 
two)  the  best  intelligence  must  go  to  this  special  evil  of  railroad 
discrimination.  The  trust  plus  special  railroad  favors  can  never 
be  other  than  a  danger  because  it  makes  directly  for  an  economic 
inequality  that  is  based  on  secret  privileges  that  are  impudently 
unfair.  What  is  even  more  serious,  it  opens  the  door  to  those 
forms  of  political  corruption  that  have  become  the  gravest  peril 
to  the  commonwealth. 

I  therefore  assume'  that  no  answer  is  possible  to  my  subject, 
"Are  the  new  combinations  dangerous?"  Unless  that  measure  of 
control  is  secured  which  is  represented  by  (a)  complete  publicity; 
(b)  removal  of  tariff  privileges;  (c)  the  ending  of  special  railway 
favors,  I  should  defend  this  opinion  not  upon  theoretical 
grounds,  but  upon  such  practical  experience  as  one  may  observe 
already  on  the  field. 

Of  these  restraints  upon  abuses,  I  believe  an  absolute  above- 
board  method  of  doing  business  (as  complete  as  that  to  which  the 
national  banks  must  now  submit)  to  be  by  far  the  most  important. 
This  remedy  lies,  moreover,  along  the  line  of  practical  and  pos- 

60 


sible  achievement.  No  one  in  the  community  knows  better  the 
necessity  of  such  publicity  than  the  very  men  who  make  the 
trusts.  Nor  have  I  even  heard  this  necessity  stated  so  strongly 
and  so  convincingly  as  by  some  of  these  gentlemen.  I  say  that 
this  remedy  is  practical  because  there  is  now  a  wide  and  various 
experience  for  our  guidance.  Germany  has  plenty  of  these 
larger  corporations — that  we  are  now  discussing  under  the  anti- 
quated name  of  trusts — but  the  rights  of  the  stockholders,  to 
every  whit  of  information  necessary  to  their  security,  are  assured 
in  that  country.  A  competent  writer  upon  trusts,  like  Dr.  von 
Halle,  is  astounded  in  his  investigations  in  tKe  United  States 
that  a  people  famous  for  practical  business  shrewdness  should 
suffer  the  gross  abuses  which  this  secrecy  involves.  England  has 
also  her  powerful  "  alliances."  A*  good  authority  has  estimated 
that  capital  has  been  shifted  from  the  smaller  to  the  larger  cor- 
porations to  the  extent  of  two  billions  of  dollars  within  the  last 
dozen  years.  But  the  law  gives  to  the  stockholder  very  definite 
rights  of  publicity,  and  the  Lord  Chief  Justice,  since  the  Hooley 
scandals,  says  that  these  rights  must  be  made  more  exacting  still. 
The  forced  publicity  for  private  as  well  as  for  public  corporations 
in  Massachusetts  makes  any  dangerous  degree  of  stock-watering 
extremely  difficult.  Evasion  in  the  case  of  private  corporations 
is  still  to  some  degree  possible ;  but  it  is  certain  that  the  law  has 
proved  so  far  successful  that  it  may  be  made  the  basis  of  further 
legislation  of  a  most  hopeful  character. 

Give  us,  then,  an  absolute  publicity  of  methods  and  special 
dangers  like  "over-capitalization"  are  practically  met.  If  the 
trust  movement  spreads,  as  now  seems  likely,  by  far  the  larger  part 
will  go  to  the  wall  from  sheer  speculative  bravado.  The  people 
meanwhile  will  be  rapidly  educated,  and  above  all,  the  banks  will 
be  swift  to  learn  the  lesson,  and  refuse  to  underwrite  if  the  venture 
is  too  daring  in  its  risks.  Only  those  trusts  will  survive  that 
are  prudently  organized,  and  deal  with  a  product  which  lends 
itself  to  the  conditions  imposed  by  the  new  combination. 
Economic  discussion  is  at  last  so  far  popularized  that  the  people 
will  take  a  passionate  interest  in  the  coming  debate.  Popular 
economic  training  always  tells  if  it  turn  upon  vivid  concrete 
events  that  stir  great  waves  of  interest.  No  industrial  event  ever 
gave  a  more  magnificent  occasion  for  education  upon  what  is 
deepest  in  the  so-called  social  question.  The  essence  of  the  new 
combination  is  that  it  is  a  more  cunning,  and  more  powerful 
machine  applied  to  industry.  That  means  that  it  carries  in  it  the 
very  heart  of  the  social  question.  The  pithiest  formula  I  could 
give  of  the  social  question  (on  its  material  side)  is  this :  It  is  the 

61 


struggle  for  the  advantages  of  applied  science  and  invention  to 
industry.  At  bottom,  this  is  the  fight  in  our  great  strikes.  The 
coming  contest  in  our  municipalities  is  accurately  this :  Who  is 
to  control  the  vast  machinery  such  as  lighting  and  transporta- 
tion? Socialism  itself  cannot  be  better  defined  than  by  its  atti- 
tude toward  machinery.  Industrial  organization  on  a  great  scale 
•did  not  begin  until  after  the  Civil  War,  say  1867.  Then,  begin- 
ning with  the  railroad,  we  had  an  outburst  of  vast  organization 
of  business.  At  this  point  trade  unions  begin  an  entirely 
new  epoch  in  their  history.  They,  too,  strike  for  organization  on 
a  far  wider  plan. '  More  significant  still :  here,  too,  are  the  begin- 
nings of  large  farmers'  alliances.  Whether  as  Grangers  or  as 
Populists,  no  one  will  explain  the  farmers'  movement  without 
constant  and  closest  reference  to  the  angry  feeling  that  the  great 
machine  that  touched  them  (the  railroad)  was  somehow  used 
unfairly  against  the  farm  interests.  Now  another  period  for 
necessary  reorganization  is  upon  us.  The  mechanism  for  this  is 
the  yet  more  stupendous  combination  we  are  considering.  It 
will  do  precisely  what  the  great  machinery  has  always  done: 
create  temporary  disturbance.  It  will  shut  hundreds  of  of- 
fices, and  drop  thousands  who  were  working  on  the  displaced 
machines.  But  meantime  the  new  work  has  to  be  done  under 
new  forms,  and  when  the  readjustment  comes,  more  men  and  not 
fewer  will  be  required  to  do  it.  What  right  has  one  to  say  that? 
There  is  now  the  most  absolute  proof  that  the  growth  of  industrial 
machines  is  putting  to  work  a  larger  and  larger  proportion  of  the 
people  of  the  United  States.  The  new  combinations  that  survive 
are  not  likely  to  act  differently  in  this  respect  from  the  weaker 
corporations  which  preceded  them.  But  the  alarm  is  raised 
about  "  absolute  monopoly."  "The  trusts  are  to  corner  the  very 
necessities  of  life."  How  much  evidence  do  we  need  to  show  that 
this  cannot  be  done?  Attempts  have  been  made  by  the  thou- 
sand, but  almost  without  exception,  it  is  a  history  of  dismal  fail- 
ure. Certain  "  practical  monopolies  "  may  be  formed,  and  have 
been  formed,  but  they  cannot  endure  unless  they  put  some  kind 
of  economic  superiority  upon  the  market.  They  must  serve  the 
consumer  better,  or  they  will  be  crowded  from  the  field.  The 
Standard  Oil  is  too  exceptional  in  its  nature  to  furnish  a  safe 
analogy.  The  sharp  geographical  limits  that  shut  in  our  anthra- 
cite coal  would  seem  to  offer  a  rare  chance  for  autocratic  monop- 
olizing of  prices,  but  a  dozen  states,  filled  with  soft  coal  that  can- 
not be  monopolized,  constitute  a  powerful  and  permanent  check. 
Is  there  a  sign  that  sugar — powerfully  organized  as  it  is — can  be 
absolutely  monopolized?  Or  can  we  imagine  bread,  shoes,  bricks, 

62 


clothing,  lumber  to  be  brought  under  complete  and  permanent 
monopoly?  The  simple  fact  that  capital  is  increasing  so  much 
faster  than  population,  and  is  pressing  at  every  point  for  profit- 
able investment,  goes  far  to  prove  this  fear  groundless.  This  is 
"  the  ever  possible  competition  "  of  which  economists  have  made 
so  much.  It  acts  with  increasing  and  with  relentless  power  to 
put  the  monopolist  upon  his  good  behavior.  Nor  does  any  day 
pass  that  does  not  make  the  complete  monopoly  of  wide  necessi- 
ties over  long  periods  of  time  less  and  less  possible.  A  great 
deal  of  money  will  be  made,  especially  by  the  earlier  successes. 
But  the  very  nature  of  the  risks  makes  this  inevitable.  A  bit  of 
history  is  very  wholesome  for  us  on  this  point. 

Whenever  a  great  change  has  come  in  economic  evolution, 
there  is  naturally  extreme  danger  connected  with  the  new  under- 
taking, because  traditional  methods  can  not  be  depended  upon. 
The  dangers  of  disaster  are  extreme,  and  only  men  of  great  bold- 
ness, willing  to  take  larger  risks,  come  to  the  front.  It  is  this 
type  of  man  that  has  caught  the  wave  as  it  rose,  and  made,  if  he 
succeeded,  enormous  profits.  Human  wit  has  never  yet  pre- 
vented this,  and  it  is  more  than  doubtful  if  it  would  be  well  to  do 
it,  if  we  could.  A  single  illustration  is  worth  giving :  When  the 
new  organization  of  the  factory  began  there  was  such  extreme 
uncertainty,  the  dangers  of  disaster  were  so  great,  that  only  the 
more  far-sighted  and  courageous  were  willing  to  take  the  risks. 
Those  who  took  them  and  succeeded,  made  enormous  profits. 
Profits  of  200  per  cent,  300  per  cent,  and  400  per  cent  were  not 
uncommon  in  England  during  the  formative  period.  Does  any- 
one believe  that,  in  the  state  of  knowledge  then  existing,  this  rich 
tribute  of  the  successful  could  have  been  stopped?  Two  things 
steadily  lowered  these  extraordinary  returns  to  capital :  competi- 
tion, and  the  control  of  factory  legislation.  Very  few  trusts  will 
make  200  to  300  per  cent  profits.  But  nothing  under  heaven  will 
prevent  the  daring  and  successful  from  reaping  for  a  time  unusual 
rewards  from  the  new  ventures.  If  competition  plus  legal  regu- 
lation work  now  as  they  have  worked,  however  bunglingly  in  the 
past,  nothing  will  long  prevent  the  consuming  public  from  shar- 
ing the  advantage?  of  the  coming  organizations.  Note  further 
that  when  the  house  and  village  industries  were  crowded  out  by 
the  factory,  there  was  extreme  and  widespread  alarm.  "What  is 
to  become  of  the  independent  worker?"  it  was  said;  "the  factory 
destroys  independence  and  makes  an  army  of  dependents."  But 
after  legislation  had  done  its  proper  work  it  became  clear  and 
indisputable  that  the  dependence  of  the  village  and  house  indus- 
try was  in  every  essential  point  greater  than  in  the  factory.  The 


new  organization  in  the  long  run  made  for  a  more  complete  inde- 
pendence. When  competition  has  reached  such  terrible  limits 
as  it  now  has  in  many  phases  of  making  and  distributing  wealth, 
it  is,  according  to  our  mood,  the  climax  of  humor  or  pathos  to  talk 
too  loudly  of  universal  economic  independence.  As  all  may 
observe,  it  is  for  a  large  percentage  of  small  business  men  a  most 
haphazard  and  tottering  independence. 

It  is  this  helter-skelter  condition  that  we  have  to  compare  with 
what  the  new  combinations  will  eventually  bring  about. 

Once  more,  it  is  said  of  the  trusts,  "they  will  raise  havoc  with 
our  politics."  That  this  is  a  far  graver  peril  than  any  economic  one 
is  too  clear.  Eecognizing  the  magnitude  of  this  danger  and  with 
no  desire  to  minimize  it,  I  express  this  hope.  The  trust  that 
stays  will  bring  the  very  ablest  men  to  the  front.  They  will  very 
soon  have  to  carry  on  business  in  an  atmosphere  of  public  opinion 
thoroughly  alert  and  aroused  upon  these  issues.  It  appears  to 
me  very  unlikely  that  men  of  first  ability  will  so  fail  in  tact  as  to 
disregard  and  affront  an  alarmed,  suspicious  and  powerful  public 
opinion. 

Nor  have  I  the  slightest  question  that  if  it  become  plain  to  the 
people  that  the  combinations  manipulate  politics  to  their  own 
private  ends  and  persist  in  this,  they  will  have  themselves  to 
thank  for  driving  the  country  further  and  faster  into  socialism 
than  any  and  all  forces  that  have  ever  shown  themselves  in  our 
public  life. 

No  disinterested  student  of  this  new  period  of  organization 
that  has  come  upon  us  will  fail  to  look  with  alarm  at  the  signs  of 
risk  and  danger  it  may  bring  to  organization  among  the  wage- 
earners.  If  organization  is  so  all-important,  as  the  capitalist 
employer  claims,  the  importance  cannot  be  good  and  necessary  at 
the  top  alone.  It  should  be  good  and  necessary  at  the  bottom 
also.  Nowhere  does  competition  work  more  powerfully  and 
more  pitilessly  than  among  the  laborers.  In  this  desire  to  see 
fair  play,  will  not  the  public  insist  that  if  organization  be  indeed 
so  essential  for  the  employer,  it  is  just  as  essential  for  the  em- 
ployed ?  It  is  also  to  be  hoped  that  the  exigencies  of  organization 
among  the  laborers  will  tend  (as  it  does  among  emplovers)  to 
bring  the  really^ strong  and  able  men  to  the  front  in  the  trade 
unions? 


64 


AZEL  F.  HATCH. 

Member  Illinois  Bar. 

The  general  movement  toward  industrial  consolidation,  which 
is  recognized  and  assumed  by  the  call  for  this  conference,  did 
not  come  into  being  without  causes,  and  cannot  be  explained  as  a 
popular  delusion. 

.Nothing  is  more  conservative  than  capital.  It  always  clings 
to  the  established  order  until  something  better  has  been  demon- 
strated. When,  therefore,  we  observe  great  industries  forming 
into  national  organizations,  changing  the  form  of  investment  of 
hundreds  of  millions  of  dollars ;  when  transportation  companies 
become  continental  in  their  spheres  of  influence;  and  when  this 
drift  includes  within  its  scope  almost  everything  in  manufactures, 
transportation  and  commerce,  and  almost  every  form  of  labor, 
we  intuitively  search  for  adequate  causes. 

The  rush  and  roar  of  the  torrent  of  combinations  now  attract 
the  attention  of  all,  and  create  the  imDression  that  the  movement 
is  of  present  origin  simply  because  we  have  not  observed  nor 
recognized  as  capable  of  their  present  development  the  causes 
which  have  for  a  considerable  period  teen  shaping,  accumulating 
and  accelerating  the  industrial  development  of  the  country.  For 
more  than  twenty-five  years  there  have  been  constant  efforts,  in 
the  formation  of  pools,  "gentlemen's  agreements,"  trusts  and 
traffic  agreements,  to  avoid  the  intolerable  conditions  which  un- 
restrained competition  have  produced,  and  to  find  a  way  to  make 
secure  a  fair  compensation  for  invested  capital.  These  efforts 
have  generally  failed  after  short  periods  of  existence,  because  they 
could  not  be  enforced.  It  was  only  when  some  of  the  states  had 
passed  liberal  and  comprehensive  laws  authorizing  the  formation 
of  corporations,  with  powers  commensurate  with  the  necessities 
of  modern  methods  of  business,  that  an  effectual  way  to  combine 
and  consolidate  great  industries  was  found. 

Among  the  causes  which  have  tended  to  inaugurate  the  pres- 
ent movement  toward  consolidation  of  industries,  are  to  be 
found  the  following: 

First — The  modern  multiplication  and  perfection  of  the 
means  of  communication  and  transmission  of  intelligence  have 
rendered  possible  a  vastly  enlarged  supervision  and  control  by 
the  individual  manager.  The  telegraph,  the  telephone,  the  fast 
mail,  and  the  limited  express  have  nearly  eliminated  time  and 
distance  in  his  transaction?,  and  the  stenographer  and  type- 
writer have  multiplied  his  capacity  to  dispatch  business.  The 


intelligent  use  of  modern  facilities  for  the  transaction  of  busi- 
ness has  rendered  possible  and  practical  the  concentration  and 
consolidation  under  single  management  of  a  magnitude  and 
multiplicity  of  business  interests  which  a  generation  ago  would 
have  been  physically  impossible. 

Second — The  great  increase  in  this  country  of  unemployed 
capital  and  the  steady  decrease  of  interest  rates  have  made  it 
possible  to  secure  the  necessary  capital  for  large  enterprises. 
When,  therefore,  liberaT  corporation  laws  made  investments*  in 
industrial  enterprises  secure,  a  new  and  attractive  field  for  in- 
vestment was  opened  up,  and  corresponding  opportunity  and 
impetus  were  given  to  industrial  expansion  and  development. 

Third — The  enactment  of  liberal  laws  authorizing  the  or- 
ganization of  corporations,  with  unlimited  capital  and  for  the 
transaction  of  all  kinds  of  lawful  business,  has  opened  up  many 
avenues  heretofore  closed.  The  progress  toward  greater  liber- 
ality has  been  general,  and  in  some  of  the  states  has  been  very 
marked,  and  during  the  last  twenty  years  has  been  more  rapid 
than  ever  before.  This  has  been  a  positive  and  direct  stinmlus 
to  organization  and  co-operative  investments,  and  has  done  much 
to  familiarize  the  people  with  investments  in  corporations. 

Fourth — Probably  the  most  potent  cause  is  to  be  found  in 
the  folly  and  wastefulness  of  unrestrained  competition.  Sev- 
eral salesmen  striving  to  secure  a  single  order;  making  sales 
without  profit  or  at  a  loss,  to  prevent  a  competitor  from  selling; 
the  useless  multiplication  of  selling  agencies  and  selling  ex- 
penses; the  necessity  of  meeting  the  prices  of  rivals  or  necessi- 
tous competitors  who  are  selling  at  less  than  cost;  these  prac- 
tices, and  many  others  almost  too  foolish  and  suicidal  for  cre- 
dence have  converted  competition  in  many  industries  into  a 
ruinous  warfare,  destructive  to  all  engaged  in  the  industry. 
Combination  in  such  cases  becomes  a  means  of  self-preservation. 
The  simple  fact  is  that  the  wonderful  developments  of  manu- 
facture in  this  country,  through  improved  machinery  and  di- 
vision of  labor  and  other  causes,  have  reached  a  stage  where  the 
present  domestic  market  is  inadequate  to  keep  the  wheels  in  mo- 
tion. We  must  restrict  production,  find  new  markets,  or  go 
into  bankruptcy. 

Fifth — The  enumeration  of  some  of  the  economies  of  con- 
solidation is  another  way  of  pointing  out  the  loss  and  waste- 
fulness of  the  present  methods.  A  consolidation  of  a  large  per- 
centage of  an  industry  is  able  to  buy  in  large  quantities  and  at 
original  sources,  and  upon  corre=pondingly  advantageous  terms, 


It  also  sells  in  large  quantities.  It  can  do  the  business  with 
fewer  salesmen  and  with  a  smaller  number  of  branches  or  places 
of  business  and  at  a  smaller  percentage  of  expense.  By  reason 
of  its  extent,  and  because  it  handles  a  large  percentage  of  the 
product  of  the  entire  industry,  its  managers  can  obtain  a  better 
knowledge  of  the  market,  and  avoid  the  necessity  of  carrying 
large  stocks.  By  diminishing  the  aggregate  of  stocks  it  makes 
a  saving  in  interest,  insurance,  storage,  and  shop  wear.  By  the 
greater  specialization  of  manufacture,  it  is  enabled  to  employ 
the  several  plants  upon  those  lines  of  manufacture  for  which 
they  are  best  adapted.  Those  plants  which  are  best  equipped 
can  be  run  full  capacity  and  to  the  best  advantage.  The  ad- 
vantages of  patents  and  of  special  machinery  can  be  more  fully 
utilized.  The  best  quality  of  goods  can  be  produced,  the  num- 
ber of  styles  diminished,  and  the  best  and  most  profitable  kinds 
of  manufacture  prosecuted  to  the  full  capacity  of  the  plants. 
Experience  and  skill  and  improved  methods  of  manufacture  have 
larger  fields  for  their  employment  and  usefulness,  and  the  grade 
of  goods  can  be  improved  by  comparative  administration  of 
the  several  plants.  The  plants  situated  in  various  parts  of  the 
country  can  supply  the  demand  in  their  several  neighborhoods, 
thus  saving  a  large  amount  of  cross-shipments  and  freights.  The 
ability  to  reach  out  for  foreign  trade  and  to  prepare  for  and  meet 
every  demand  is  very  greatly  enlarged.  In  the  case  of  fire, 
flood,  or  local  strikes,  the  work  goes  on  elsewhere,  and  prevents 
loss  upon  contracts  or  loss  in  trade.  The  terms  of  sale  are  more 
uniform  and  the  credits  safer. 

I  think  the  foregoing  causes  explain  to  some  extent  why  the 
proprietors  of  industrial  enterprises  have  recently  received  sug- 
gestions of  combination  with  so  much  favor.  They  show  how 
and  why  such  combinations  can  be  accomplished  now  more  read- 
ily than  formerly. 

It  does  not  follow,  however,  because  economies  and  advantages 
in  consolidation  are  found  in  one  industry,  that  they  are  to  be 
found  to  the  same  degree  or  at  all  in  every  other  industry.  While 
it  is  undoubtedly  true  that  some  of  the  advantages  above  men- 
tioned will  generally  apply  to  combinations,  the  degree  of  bene- 
fit must  be  largely  determined  by  the  nature,  extent,  and  situa- 
tion of  the  industry. 

If  it  be  admitted  or  stands  proven  that  combinations  in  an 
industry,  when  properly  managed,  are  economical;  that  they 
prevent  waste  and  more  fully  utilize  the  fruits  of  industry,  the 
conclusion  follows  that  they  are  a  natural  evolution  in  industrial 

67 


pl'ogfess  and  are  analogous  to  all  other  improvements  in  busi- 
ness, like  improved  machinery,  department  stores,  and  improved 
facilities  in  transportation. 

If  the  foregoing  conclusions  are  sound  then  industrial  com- 
binations have  come  to  stay.  The  world  of  industry  is  not  march- 
ing backward.  Nor  is  it  an  evidence  to  the  contrary  that  some 
are  injured  by  combinations.  Every  advance  leaves  somebody 
behind.  All  improvements  which  work  economies  result  in  dis"- 
placing  certain  elements  of  labor.  Consolidations  will  displace 
salesmen,  will  close  stores,  and  in  some  cases  manufactories,  and 
will  dispense  with  the  services  of  middlemen,  just  as  the  reaper 
and  mower  displaced  the  scythe  and  the  cradle,  and  the  thresh- 
ing machine  the  flail  and  the  threshing  floor.  The  railroad 
rendered  the  stage  antiquated  and  displaced  thousands  engaged 
in  the  old  methods  of  transportation.  The  sewing  machine  threw 
thousands  of  needle  workers  out  of  employment,  but  the  ulti- 
mate result  of  all  these  changes  in  industry  was  for  the  ad- 
vantage of  the  whole  community,  notwithstanding  the  hardship 
to  some  individuals. 

That  criticism  which  calls  every  corporation  or  consolida- 
tion a  trust,  and  which  condemns  every  aggregation  of  capital 
as  a  public  danger,  is  both  ignorant  and  vicious.  Corporations 
are  no  better  nor  worse  than  the  individuals  who  manage  them. 
Some  are  law-abiding  and  are  entitled  to  the  same  protection 
of  the  laws  and  the  same  support  and  encouragement  in  develop- 
ing the  resources  of  the  country  and  in  affording  employment  to 
its  inhabitants,  that  are  given  to  the  public-spirited  individual. 
The  powerful  always  need  restraint.  Great  corporations  are 
no  exception  to  this  rule.  They  should  be  compelled  to  ob- 
serve the  same  methods  of  business,  to  obey  the  same  laws,  and 
to  confine  their  operations  to  the  same  limits  to  which  individ- 
uals are  confined.  They  must  be  compelled  to  pay  their  share 
of  taxes  and  to  bear  their  portions  of  public  burdens.  They 
must  be  fair  in  their  methods  of  competition.  They  must  be  held 
to  terms  of  equality  in  freights  and  in  all  other  semi-public  deal- 
ings. No  public  favors,  by  tariffs  or  otherwise,  should  be  ex- 
tended to  them. 

Some  of  the  dangers  to  the  public  from  these  organizations 
are  to  be  found  in  the  great  power  placed  in  the  hands  of  single 
individuals,  and  in  their  ability  to  influence  legislation  and  to 
become  factors  in  political  management  and  manipulation.  This 
danger  emphasizes  the  necessity  of  removing  every  temptation 
to  influence  legislation  on  the  part  of  the  man  in  business.  Aside 
from  tariff  legislation,  there  is  little  which  can  affect  the  interest 

68 


of  manufacturers  or  those  engaged  in  general  commerce,  but  this 
is  a  danger  which  has  long  been  in  existence,  and  the  evils  of 
which  are  not  confined  to  present  or  future  combinations.  All 
of  the  methods  of  unfair  competition  which  have  been  employed, 
may,  in  the  hands  of  a  great  organization,  become  greatly  in- 
tensified and  aggravated.  The  public  should  be  protected  against 
all  such  aggressions  and  all  of  the  evil-doers,  whether  great  cor- 
porations or  powerful  individuals,  should  be  punished  alike. 

Jt  is  not  to  be  gainsaid  that  these  organizations  are  beset  by 
numerous  dangers.  The  loss  of  the  good-will  of  the  business 
of  the  constituent  members  of  the  consolidation  is  one  of  its 
greatest  dangers.  There  is  always  the  possible  danger  that 
managers  of  sufficient  ability  to  control,  direct,  and  successfully 
manage  a  great  corporation  cannot  be  found.  It  is  one  thing 
to  manage  a  small  business  under  the  immediate  observation  of 
its  owner,  and  another  to  successfully  manage  a  large  number 
of  plants  scattered  all  over  the  United  States,  and  aggregating, 
in  the  volume  of  trade  and  business,  many  times  any  one  of  its 
constituent  parts.  There  is  always  the  danger  that  the  indi- 
vidual interest  of  the  local  managers  will  not  be  aroused  and 
their  best  efforts  will  not  be  secured  in  the  same  sense  that  they 
are  in  the  case  of  private  ownership.  These  are  matters  to  be 
determined  by  experience,  and  if  these  combinations  are  to  suc- 
ceed, methods  must  be  found  to  enlist  the  thorough  and  con- 
sistent effort?  of  all  of  the  employes  of  these  great  organizations. 

Some  of  the  changes  which  are  brought  about  by  the  great 
consolidations  in  progress  are  factors  of  business  safety.  In  every 
consolidation  there  is  a  great  liquidation  of  the  indebtedness  of 
the  several  concerns  entering  into  the  consolidation.  The  lines 
of  credit  theretofore  extended  to  the  several  constituent  con- 
cerns are  extinguished.  The  new  company  generally  begins 
business  with  a  large  cash  working  capital.  If  it  has  debts, 
they  are  in  the  form  of  long-term  bonds,  instead  of  demand 
accounts  and  short-time  notes,  which  in  times  of  contraction  and 
financial  distress  become  an  element  of  danger.  The  movement 
to  that  extent  becomes  a  contraction  of  credit,  and  is  an  ele- 
ment of  conservatism  and  safety.  The  large  organizations  are 
generally  doing  business  upon  a  cash  basis,  or  upon  a  more  con- 
servative basis  than  the  constituent  members  of  which  the  or- 
ganization was  composed.  This  is  true  to  such  an  extent  that 
there  has  been  a  noticeable  decrease  in  the  amount  of  commer- 
cial paper  offered  at  financial  centers  during  the  last  few  months. 

Another  element  of  ?afetv  i=  found  in  the  ability  to  oversee 
the  field  of  industry  and  prevent  unnecessary  >and  ruinous  gluts 

69 


in  the  market.  A  man  who  manufactures  and  sells  but  two 
or  three  per  cent  of  the  products  in  an  industry  never  can  be 
sure  that  his  business  indicates  the  general  condition  of  the 
trade,  but  the  manager  who  handles  sixty  or  seventy  per  cent 
of  the  products  of  that  industry  can  much  more  safely  gauge  the 
extent  of  the  market  and  the  future  demand.  This  tends  to  pre- 
vent an  unnecessary  extension  of  credit  and  an  overproduction 
in  manufacture. 

Another  factor  of  safety  is  to  be  found  in  the  ability  to  en- 
large the  market  by  the  extension  of  foreign  trade  and  by  the 
steadier  and  safer  market  due  to  the  extent  of  the  domestic  sales. 
The  larger  and  broader  the  market,  the  steadier  and  safer  it  is. 

Again,  by  means  of  the  great  extent  of  the  corporation  and 
the  placing  of  its  securities  upon  the  general  exchanges  of  the 
country,  its  stock  becomes  distributed  among  a  large  number 
of  holders,  and  has  a  known  value  and  a  ready  market.  The  or- 
ganization thereby  becomes  a  distributer  rather  than  a  con- 
centrator of  wealth.  Where  the  original  owners  were  numbered 
by  hundreds,  the  ultimate  stockholders  are  numbered  by  thou- 
sands. 

The  control  of  prices,  which  is  often  apprehended,  can  be 
brought  about  permanently  only  by  such  a  superiority  in  the 
methods  of  manufacture  as  will  successfully  defy  competition. 
Any  price  established  by  a  combination  which  enables  competi- 
tors to  make  a  reasonable  profit  will  soon  encourage  such  com- 
petition as  will  reduce  the  price.  No  permanent  monopoly, 
not  founded  upon  some  governmental  privilege  in  the  nature 
of  a  patent  or  a  public  license- or  a  tariff  protection,  can  long 
exist,  unless  founded  upon  the  superior  excellence  and  economy 
in  manufacture.  The  present  combinations  do  not  destroy  com- 
petition. They,  on  the  contrary,  are  themselves  the  creatures 
of  competition.  The  fundamental  cause  of  these  combinations 
has  been  an  effort  for  self-preservation  against  the  evils  of  unre- 
strained competition.  The  wise  manager  of  a  combination, 
even  if  he  has  it  within  his  power  temporarily  to  control  the  prices 
in  any  industry,  will  not  raise  those  prices  to  a  point  which  en- 
courages the  establishment  of  competing  plants.  The  econo- 
mies of  consolidation  and  a  fair  return  upon  capital  invested 
afford  a  sufficient  protection  and  encouragement  to  every  con- 
solidation without  an  attempt  to  control  prices. 

"While  a  corporation  engaged  in  a  private  business,  and  hold- 
ing no  rights  or  privileges  by  public  grants,  is  under  no  obliga- 
tion to  disclose  its  business  to  the  Dublic  generally,  any  more 
than  an  individual  in  the  same  business,  the  managers,  officers, 


and  directors  of  every  corporation  are  trustees  for  its  stock- 
holders, and  are  bound  to  exercise  perfect  good  faith  toward 
them.  Any  concealment  from  such  stockholders  which  operates 
to  their  injury,  and  every  advantage  gained  by  the  trustee  which 
lie  appropriates  to  his  personal  gain,  is  a  plain  dereliction  of  duty, 
and  should  be  punished  by  law.  Stockholders  should  have  ac- 
cess to  the  books  and  records  of  the  corporation  at  all  reason- 
able times,  and  should  have  the  power  to  compel  disclosure  of 
all  information  necessary  for  the  protection  of  their  interests. 
All  corporations  which  appeal  to  public  support  by  placing  their 
stocks  upon  the  public  exchanges,  thus  inviting  investment  by 
the  public  in  their  securities,  should  give  the  greatest  degree 
of  publicity  to  their  affairs.  If  the  public  are  invited  generally 
to  invest  in  the  securities  of  a  corporation,  the  truthfulness  of 
all  representations  made  should  be  enforced,  and  the  same  de- 
gree of  publicity  to  which  the  stockholder  is  entitled  should  be 
extended  to  the  public.  This  is  founded  not  on  any  supposed 
right  of  the  public  to  pry  into  the  private  business  of  people 
associated  in  the  form  of  a  corporation,  but  to  prevent  fraud  and 
imposition  upon  the  public  in  selling  the  stocks  of  corporations. 
This  publicity  should  be  enforced  not  only  by  the  stock  ex- 
changes where  these  stocks  are  dealt  in,  but  by  public  statute. 
If  I  am  invited  to  buy  the  stock  of  a  corporation,  I  have  a  right 
to  know  what  assets  it  represents,  and  what  its  earnings  and  ex- 
penses are,  and  all  the  details  which  give  light  upon  the  value  of 
the  stock,  and,  having  bought  the  stock,  I  have  a  right  to  know 
how  my  interest  in  the  company  is  being  administered  by  its 
officers  and  directors. 

This  publicity  would  make  overcapitalization  comparatively 
harmless.  The  facts  which  go  to  the  question  of  success  of  the 
business  of  a  corporation  are  those  which  determine .  whether 
or  not  it  is  doing  its  business  at  a  profit,  and  whether  or  not  it 
is  indebted.  If  it  is  free  from  debt  and  doing  business  at  a 
profit,  it  is  immaterial,  so  far  as  the  business  success  of  the  cor- 
poration is  concerned,  whether  its  stock  be  worth  ten  or  a  hun- 
dred, or  whether  it  be  one  million  or  ten  millions  in  amount. 
Multiplying  the  number  of  shares  of  a  corporation  does  not  affect 
its  assets  nor  its  earning  power.  It  is  difficult  to  understand 
how  an  attempt  to  pay  dividends  on  a  large  capitalization  in- 
creases prices,  as  some  claim,  unless  we  assume  that  the  man- 
agers of  corporations  with  small  capitalizations  do  not  try  to 
make  as  large  profits  as  they  can,  and  voluntarily  depress  prices 
to  their  own  disadvantage.  We  have  never  discovered  such  a 
charitable  disposition  in  business,  even  among  managers  of  cor- 

71 


porations  organized  on  a  cash  "basis.  It  is  safe  to  assume  that 
everyone  in  business  will  make  his  profits  as  large  as  he  can. 
Overcapitalization  is  a  danger  to  the  investor,  rather  than  to 
the  corporation  or  to  the  public  dealing  with  the  corporation. 
It  is  a  kind  of  inflation.  It  amounts  to  a  creation  of  fictitious 
stock,  which  affords  an  opportunity  to  impose  upon  the  unwary 
investor.  This  is  an  evil  wherever  there  is  any  concealment  of 
the  affairs  of  the  corporation.  Issuing  a  false  prospectus  or  a 
false  statement  of  a  corporation  ought  to  be  punishable  here,  as 
it  is  in  England. 

E.  S.  TAYLOE. 

Member  Indiana  Bar. 

At  the  beginning  of  the  recent  remarkable  movement  toward 
large  combinations  in  business,  the  organizations  were  in  the 
form  of  trusts,  properly  so  called.  The  associated  corporations 
put  their  stock,  with  its  voting  power,  into  the  hands  of  a  trustee 
or  trustees ;  and  so,  while  the  different  corporations  retained  their 
separate  legal  existence,  they  became  subject  to  a  single,  central 
control.  Such  arrangements  are  very  vulnerable.  They  are  so 
plainly  combinations  in  restraint  of  trade  that  they  are  easily 
reached  under  the  law.  Hence  they  have  been,  for  the  most 
part,  abandoned  and  replaced  by  great,  single  corporations;  and 
these,  for  want  of  a  better  name,  we  continue,  quite  inappropri- 
ately, to  call  trusts.  But  it  is  material  to  note  that  the  things 
with  which  we  have  to  deal  are  corporations,  lawful  and  regular 
in  form  and  ostensible  objects,  and  differing  from  the  ordinary 
corporation  only  in  the  scale  of  their  operations. 

Legal  remedies  are  directed  against  legal  wrongs.  The  ascer- 
tainment of  the  wrong  logically  precedes  the  study  of  the  remedy. 
What  real  harm,  therefore,  do  these  great  corporations  do  or 
•threaten  to  society  which  calls  for  intervention  by  the  law? 

It  is  manifest  that  we  are  just  now  in  the  midst  of  a  trust 
craze.  But  that  will  have  its  day,  and  end  probably  in  a  crash. 
Many  persons  who  are  investing  in  the  inflated  stocks  and  bonds 
of  these  •  "industrials"  will  suffer  heavily.  That  the  law  should 
lay  some  restraining  hand  on  the  formation  of  such  organizations 
for  the  protection  of  investors  is  very  obvious  and  very  easy 
to  say. 

But  the  interest  of  investors  in  the  shares  of  such  enter- 
prises is  a  small  consideration  beside  the  interest  of  the  general 
mass  of  the  people  whose  food,  clothing,  and  transportation  are 
controlled  by  them.  Nothing  can  be  more  certain  than  that  the 

72 


WILLIAM  JENNINGS  BRYAN 
CHARLES  FOSTER 


W.  BOURKE  COCKRAN 
HENRY  W.  BLAIR 


day  of  small,  divided,  competing  industrial  organizations  has 
gone  by.  The  growth  of  corporations  is  one  feature  of  the  uni- 
versal evolution.  The  big  ones  we  have  are  here  to  stay  in  some 
form,  and  grow  larger,  rather  than  smaller.  They  will  survive 
the  collapse  of  their  inflated  capitalization  just  as  the  railroads 
have  survived  a  like  experience.  What  harm  will  they  do  to 
society  as  permanent  institutions? 

There  is  one  result  attending  them  which  it  is  impossible  to 
contemplate  without  a  feeling  of  regret,  whether  the  feeling  be 
entirely  justifiable  or  not.  It  is  the  limitation  of  individual  op- 
portunity and  the  diminution  of  individual  independence  which 
the  new  order  involves.  But  these  are  inseparable  concomitants 
of  the  system.  They  can  be  prevented  by  law  only  by  forcibly 
breaking  up  the  large  organizations  and  compelling  men  to  go 
back  to  the  old  business  methods.  That,  I  assume,  is  not  re- 
garded as  possible  by  any  intelligent  man. 

The  other  most  important  result  of  the  aggregation  of  busi- 
ness in  few  hands,  and  the  one  which  we  think  and  talk  about 
most,  is  the  control -which  it  places  in  the  hands  of  the  great 
organizations  over  production,  supply  and  prices.  Does  this 
menace  the  welfare  of  society,  and  is  there  any  legal  remedy  for 
that  wrong? 

Such  a  situation  contains  within  itself  some  elements  of  self- 
regulation  against  extremes.  The  putting  of  a  very  extravagant 
price  on  a  commodity  defeats  its  own  purpose  by  breeding  insup- 
pressible  competition,  or,  if  the  price  be  maintained,  by  restrict- 
ing the  market.  But  within  these  limitations  there  is  a  margin 
of  overcharge  which  will  yield  a  maximum  of  profit  and  may  be 
permanently  maintainable.  One  mill  per  pound  on  sugar  would 
mean  about  half  a  cent  a  month  per  capita  for  the  people  of  the 
United  States — not  much  of  a  burden,  even  if  it  were  an  unjust 
one,  but  amounting  in  the  aggregate  to  $4,500,000  per  annum. 
1 1  the  sugar  trust  is  doing  75  per  cent  of  the  business  of  the 
country,  as  is  said  to  be  the  case,  and  receiving  one-tenth  of  a 
cent  a  pound  more  than  a  just  price,  it  is  taking  from  the  people 
more  than  three  and  a  third  million  dollars  a  year  to  which  it 
is  not  in  justice  entitled.  And  with  its  terrible  power  to  punish 
competition,  it  might  be  able  to  maintain  that  unjust  imposition 
permanently.  That  may  be,  and  probably  is,  in  some  measure, 
what  the  Standard  Oil  Company  has  .been  doing  for  years  past — 
enforcing  prices  so  little  too  high  that  they  do  not  invite  dan- 
gerous competition,  nor  provoke  violent  resistance  from  con- 
sumers, but  enough  too  high  to  constitute  a  wrong  toward  the 
public  of  great  magnitude  in  the  aggregate.  If  all  commodities 

73  \ 


should  be  brought  under  similar  control  by  like  organizations 
and  treated  in  the  same  way,  the  immensity  of  the  robbery  of 
the  public  would  be  enormous,  and  none  the  less  robbery  because 
perpetrated  by  means  of  infmitesimally  small  extortions.  It 
is  to  some  such  complexion  as  this  that  the  present  development 
seems  to  me  to  point  as  its  ultimate  result. 

Here  we  have  elements  of  permanent  and  serious  evil.  The 
levying  of  unjust  prices,  or  the  exercise  of  unjust,  arbitrary  con- 
trol over  production  or  exchange  is  a  wrong,  simple,  primary  and 
direct,  which  is  not  mitigated  by  its  skillful  distribution  among 
its  subjects  in  such  manner  that  they  can  bear  it,  and  live  to 
bear  it  to  the  natural  end  of  life.  The  building  up  of  vast  for- 
tunes in  few  hands  by  means  known  to  be  iniquitous  but  never- 
theless tolerated  by  law,  and  the  discontent  and  disloyalty  to  gov- 
ernment and  law  which  such  things  are  bound  to  produce,  are 
evils  even  greater  in  magnitude. 

Here  we  have,  to  my  mind,  the  main  problem.  How  shall 
we  distinguish  among  corporations?  Shall  we  put  arbitrary 
limitations  upon  their  capital  or  the  amount  of  business  they 
may  do,  or  the  territory  they  may  occupy  with  their  trade?  Shall 
we  attempt  to  exercise  a  control  by  law  over  the  great  ones  which 
we  do  not  exercise  over  the  small  ones?  In  the  exercise  of  that 
control,  shall  we  prescribe  prices  by  law,  and  undertake  to  say 
beforehand  how  much  the  sugar  trust  and  the  Standard  Oil  Com- 
pany shall  charge  the  people  for  sugar  r.nd  oil?  Is  the  legisla- 
ture wise  enough  to  exercise  such  a  power  safely?  If  it  were, 
could  it  do  it  without  impairing  the  principle  of  free  competi- 
tion? 

In  nearly  all  our  legislation,  so  far,  we  have  followed  the 
theory  of  the  common  law  that  the  power  to  control  the  produc- 
tion and  prices  of  commodities  is  one  so  sure  to  be  abused  that 
it  is  too  dangerous  to  be  entrusted  to  anyone,  and  that  the  rem- 
edy against  such  wrongs  is  to  forbid  outright  all  organizations 
and  combinations  of  men  the  effect  or  operation  of  which  will 
be  to  put  that  power  in  their  hands.  But  nothing  can  be  clearer 
than  the  ineffectualness  of  such  laws  to  meet  present  conditions. 
For  years  past,  the  states  have  been  enacting  them  in  terms  of 
increasing  severity,  while  the  trusts  and  combines  have  been 
thriving  as  though  anti-monopoly  statutes  were  only  food  for 
their  growth.  We  shall  gain  nothing  by  persevering  in  that 
direction.  The  law  must  change  its  methods.  It  must  direct 
its  prohibitions  and  penalties  against  the  real  wrongs.  It  is  im- 
possible to  meet  the  conditions  of  1900  with  the  laws  of  1700. 
We  must  recognize  and  deal  with  the  situation  as  it  is. 

74 


It  does  not  hurt  us  to  get  our  sugar  from  one  trust  and  our 
oil  from  another,  if  we  get  them  at  fair  prices.  It  does  not  hurt 
us  that  railroads  agree  on  rates,  if  they  are  fair  ones.  If  the 
courts  of  the  United  States  had  been  at  liberty  in  dealing  with 
the  Trans-Missouri  Freight  Association  to  inquire  into  the  just- 
ness and  fairness  of  the  rates  fixed  by  it,  the  merits  of  the  ques- 
tion could  have  been  considered  and  the  real  wrong,  if  there  was 
any,  would  have  been  reached.  But  the  Sherman  bill,  as  the 
Supreme  Court  decided,  gave  the  court  no  such  power.  It  was 
compelled  to  declare  the  association  illegal  because  it  was  for- 
bidden; and  it  was  forbidden  because  there  was,  in  the  judg- 
ment of  the  law,  danger  that  it  would  use  its  power  to  injure  the 
public.  If  the  Constitution  would  give  Congress  power  over  the 
whole  subject  of  railroad  transportation,  state  as  well  as  inter- 
state, and  Congress  would  give  the  courts  the  power  to  investigate 
rates,  charges,  rules,  and  regulations  which  it  has  given  to  the 
Inter- State  Commerce  Commission,  and  render  judgments  ac- 
cordingly, or  would  give  the  Inter-State  Commerce  Commission 
the  powers  of  a  court,  little  more  would  be  required  to  put  that 
great  department  of  public  concern  under  the  complete  control 
of  the  law. 

I  think  the  time  is  ripe  for  this  step  forward.  The  Inter- 
State  Commerce  Commission  has  done  an  invaluable  work,  one 
beneficial  in  its  immediate  results,  but  still  more  valuable  in 
leading  the  way  toward  a  more  perfect  system.  The  people  are 
quite  prepared  in  their  minds  now  for  governmental  supervision 
of  railway  rates;  not  the  fixing  of  rates  in  advance,  but  the 
declaration  by  law  of  principles  upon  which  rates  shall  be  estab- 
lished and  a  compulsion  by  law  of  the  observance  of  those  prin- 
ciples. We  have  come  to  this  frame  of  mind  with  regard  to  rail- 
roads because  the  combinations  and  consolidations  which  they 
have  made  among  themselves  have  placed  the  public  at  their 
mercy.  Nothing  but  the  strong  hand  of  the  government  can 
protect  the  people  from  extortion  by  the  railroads  if  they  choose 
to  practice  it. 

We  have  not  quite  reached  the  same  attitude  of  mind  with 
regard  to  commodities.  But  when  we  come  to  the  point  at 
which  all  commodities  will  be  supplied  to  us  as  sugar  and  oil  are 
now,  each  by  a  single  concern  powerful  enough  to  control  the 
trade  of  the  country  in  its  line,  and  the  fact  becomes  apparent 
tli at  that  vast  centralization  of  control  is  to  be  a  permanent  con- 
dition, we  shall  be  as  ready  for  governmental  interference  in 
those  fields  as  we  are  now  with  regard  to  railroads..  If  we  are  to 


have  such  interference,  it  is  none  too  soon  to  hegin  to  feel  our 
way  toward  it  now. 

He  would  be  one  of  those  who  "rush  in  where  angels  fear  to 
tread"  who  would  undertake  to  formulate  offhand  a  plan  for 
dealing  with  so  great  and  difficult  a  problem.  But  a  man  would 
confess  his  disbelief  in  the  capacity  of  the  race  for  self-govern- 
ment who  should  give  it  up  as  unsolvable.  It  is  the  glory  of  the 
common  law  that  it  grows  with  the  needs  of  society,  and,  either  by 
its  own  processes,  or  by  pointing  the  way  to  the  necessary  legisla- 
tion, finds  an  adequate  remedv  for  every  new  wrong.  The  wrong 
to  be  remedied  in  the  case  of  oppressive  dealing  with  the  public 
by  the  trusts  is  the  abuse  of  a  power  over  production  and  trade 
secured  by  great  aggregation  of  capital  and  working  instrumen- 
talities in  the  imposition  of  unjust  prices.  Where  a  wrong  of 
that  kind  has  been  perpetrated,  it  ought  to  be  possible  to  allege 
and  prove  the  fact  and  punish  the  perpetrator.  While  the  law  is 
not  wise  enough  to  say  what  the  price  of  sugar  ought  to  be  next 
year,  it  ought  to  be  able  to  find  out  with  reasonable  certainty 
whether  or  no  a  given  price  was  a  fair  one  last  year. 

A  bit  of  useful  side-light  is  thrown  upon  the  trust  problem  by 
its  analogy  with  the  labor  problem.  The  labor  union  is  only 
another  form  of  trust  and  combination.  Every  organized  strike, 
the  object  of  which  is  to  compel  an  employer  by  some  kind  of 
punishment  to  do  something  that  he  is  unwilling  to  do  is  as  dis- 
tinctly unlawful  by  all  the  law  in  the  books  as  the  combination 
of  employers  to  control  prices  or  production.  And  yet  we  can- 
not abolish  labor  unions  by  law.  !STo  one  is  proposing  to  do  it. 
The  people  will  not  permit  it.  It  would  be  ruinous  to  the  best 
interests  of  society  to  do  it.  If  workingmen  were  forbidden  to 
organize — if  each  one  of  them  were  required  to  make  his  own 
terms  with  the  great  employers  and  hold  his  place  at  his  em- 
ployer's mere  option — they  would  speedily  become  slaves,  eating 
their  bread  by  the  grace  of  their  masters.  Having  permitted  and 
recognized  the  unions,  we  must  allow  them  to  make  their  organ- 
ization effective,  if  it  is  to  mean  anything;  and  this,  not  by  mere 
argument,  or  persuasion,  or  entreaty,  which  would  avail  nothing 
with  certainty,  if  it  were  certain  that  nothing  more  could  follow; 
but  by  meeting  threat  with  threat  and  compulsion  with  compul- 
sion. When  the  employer  says,  "Come  to  my  terms,  or  go  with- 
out your  dinner,"  the  union  nuist  be  permitted  to  answer,  "Come 
to  our  terms,  or  shut  up  your  shop." 

Combinations  of  capital  and  combinations  of  labor  are  alike 
inevitable  concomitants  of  social  growth,  steps  in  the  evolution 
of  the  race.  The  forces  which  impel  them  are  stronger  than  the 


law.  It  seems  sad  that  it  should  be  so;  that  just  as  the  white 
banner  of  international  peace  is  lifted  at  the  Hague,  the  grim 
spectre  of  industrial  war  should  confront  us  at  home.  But  so 
it  is. 

The  unions  are  here,  and  here  to  stay.  Society  approves 
them.  The  great  tribunal  of  public  opinion,  the  final  supreme 
court,  has  decided  that  they  and  their  proceedings,  even  to  pun- 
ishment and  compulsion  of  employers,  are  lawful  and  necessary. 
It  is  for  the  law  to  admit  that  fact,  put  the  unions  into  the  cate- 
gory of  institutions  to  be  recognized,  controlled,  and  governed, 
and  provide  suitable  proceedings  for  that  purpose. 

Exactly  the  same  thing  is  true  of  the  great  corporations.  It 
is  useless  to  persevere  in  the  course  we  have  been  following,  to 
make  our  laws  more  and  more  drastic,  to  try  in  that  way  to  break 
up  the  great  combinations  now  existing,  and  prevent  others,  and 
so  bring  business  back  to  the  conditions  of  forty  years  ago.  We 
must  face  the  situation  as  it  is ;  recognize  the  great  corporations 
as  institutions  to  be  dealt  with  according  to  their  greatness,  their 
power  of  evil,  and  the  danger  of  their  abuse  of  their  powers.  We 
must  define  the  wrongs  which  are  to  be  feared  from  them,  and 
provide  means  for  the  adequate  investigation  and  punishment 
of  those  wrongs. 

This  will  tax  the  wisdom  of  the  legislature  to  its  utmost  and 
put  on  the  courts  burdens  which  they  have  never  borne  before. 
It  will  require  judicial  investigations  into  wages,  prices,  profits, 
risks,  and  all  the  elements  that  enter  into  the  conduct  of  busi- 
ness. It  will  incorporate  into  the  law  and  its  administration 
much  that  now  belongs  to  the  domain  of  economics.  It  will 
compel  disclosures  by  the  corporations  which  they  will  be  very 
unwilling  to  make.  It  will  make  it  necessary  for  them  to  do 
business  in  daylight  a.nd  have  no  secrets  from  the  state.  It  will 
make  an  end  of  fictitious  stocks  and  bonds.  While  giving  full 
play  to  invention,  enterprise,  organization,  and  every  form  of 
human  effort,  it  will  impose  on  all  the  one  condition  of  universal 
fair  dealing. 

A.  LEO  WEIL. 

Member  Pennsylvania  Bar. 

Parallels  to  the  apprehended  evils  from  the  present  era  of 
concentration  may  be  found  in  the  evils  once  predicted  from  all 
forms  of  association — evils  long  since  proved  to  have  existed  in 
imagination  only,  and  finally  so  recognized  by  solemn  legislative 
enactment  or  formal  judicial  decision. 


At  first  the  Eoman  law  required  no  special  state  authorization 
to  form  a  corporation.  Under  the  empire  special  permission  from 
the  state  became  necessary,  which  the  pagan  emperors  granted 
reluctantly. 

Tims  we  find  Pliny  the  Younger  suggesting  to  the  Emperor 
Trajan  the  advisability  of  forming  a  company  of  firemen,  adding: 
"I  will  take  care  none  but  those  of  that  business  shall  be  admitted 
into  it,  and  that  the  privileges  granted  them  shall  not  be  applied 
to  any  other  purpose.  As  this  corporated  body  will  be  restricted 
to  so  small  a  number  of  members,  it  will  be  easy  to  keep  them 
under  regulations." 

To  this  reasonable  request  the  Emperor  replied,  declining  to 
grant  the  necessary  permission,  adding,  "Whatever  name  we  give 
to  them,  and  for  whatever  purposes  they  may  be  founded,  they 
will  not  fail  to  form  themselves  into  factious  assemblies,  however 
short  their  meetings  may  be." — (Pliny's  Epist.,  B.  10,  Lets.  42 
and  43.) 

The  English  statute  of  6  Geo.  I.  Cap.  18,  declared  that  where 
there  was  no  act  of  incorporation,  the  practice  of  making  sub- 
scriptions for  commercial  undertakings,  with  the  certificates  of 
subscribers  transferable,  was  a  common  nuisance. 

In  a  case  in  which  an  indictment  was  found  under  this  statute 
against  a  number  of  parties  who  had  agreed  to  raise  two  hundred 
shares  of  £210  each,  by  paying  in  monthly  installments,  in  order 
to  build  houses  for  one  another,  it  was  said  that  such  clubbing 
together  for  the  purpose  of  carrying  on  trade  was  calculated  to 
put  down  individual  industry  and  competition,  which  are  most 
advantageous  to  the  public. — (Pratt  vs.  Hutchinson,  15  East,  pp. 
516-517.) 

Many  similar  decisions  were  rendered.  Without  reference  to 
the  statute,  but  at  common  law,  beginning  with  Lord  Eldon,  the 
courts  of  England  held  that  companies  with  large  capital,  arising 
from  numerous  small  contributions,  were  injurious  to  the  public 
and  illegal ;  though  at  a  later  period,  Lord  Brougham  decided  this 
question  the  other  way.  For  a  considerable  period,  the  formation 
of  partnership  associations  for  purposes  of  trade  was  prohibited 
under  severe  fines  and  penalties.  Compare  the  state  of  the  public 
mind  of  that  era  with  the  notion  to-day,  which  favors  the  partner- 
ship association  as  against  the  corporation. 

Were  it  not  for  its  quaint  and  now  obsolete  terms,  this  old 
English  statute  of  6  Geo.  I,  so  commemorative  of  popular  error, 
might  be  mistaken  for  a  resume  of  the  speeches  of  some  of  our 
modern  prophets,  who  pretend  to  foresee  the  evils  of  industrial 
consolidations. 


7s 


"Whereas,  it  is  notorious  that  several  undertakings  or  projects 
of  different  kinds  have,  at  some  time  or  times  been  publickly  con- 
trived and  practised,  or  attempted  to  be  practised,  which  mani- 
festly tend  to  the  common  grievance,  prejudice  and  inconvenience 
of  great  numbers  of  your  Majesty's  subjects  in  their  trade  and 
commerce,  and  other  their  affairs;  and  the  persons  who  contrive 
or  attempt  such  dangerous  and  mischievous  undertakings  or  proj- 
ects, under  false  pretences  of  publick  good,  do  presume,  accord- 
ing to  their  own  devices  and  schemes,  to  open  books  for  publick 
subscriptions,  and  draw  in  many  unwary  persons  to  subscribe 
therein  towards  raising  great  sums  of  money  whereupon  the  sub- 
scribers or  claimants  under  them  do  pay  small  proportions 
thereof,  and  such  proportions  in  the  whole  do  amount  to  very 
large  sums,  *  *  *  *  And  whereas  in  many  cases  the  said 
undertakers  or  subscribers  have  *  *  *  presumed  to  act  as 
if  they  were  corporate  bodies,  and- have  pretended  to  make  their 
shares  of  stocks  transferable  or  assignable,  without  any  legal 
authority,  either  by  act  of  parliament,  or  by  any  charter  from  the 
crown  for  so  doing;  *  *  and  many  other  unwarrantable 

practices  (too  many  to  enumerate)  have  been  and  daily  are  and 
may  hereafter  be  contrived,  set  on  foot,  or  proceeded  upon,  to  the 
ruin  and  destruction  of  many  of  your  Majesty's  good  subjects,  if 
a  timely  remedy  be  not  provided;  and  whereas  it  is  become  abso- 
lutely necessary  that  all  publick  undertakings  and  attempts,  tend- 
ing to  the  common  grievance,  prejudice  and  inconvenience  of 
your  Majesty's  subjects  in  general,  or  great  numbers  of  them,  in 
their  trade,  commerce  or  other  lawful  affairs,  being  effectually 
suppressed  and  restrained  for  the  future,  by  suitable  and  adequate 
punishments  for  that  purpose  to  be  ascertained  and  established." 

This  statute,  with  its  solemn  enumeration  of  grievances,  which 
the  logic  of  time  and  events  clearly  demonstrated  were  not  the 
essentials  of  such  associations,  was  expurgated  from  the  English 
system  of  laws,  and  in  its  place  were  substituted  enactments  giv- 
ing the  utmost  freedom  of  organization,  without  limitation  as  to 
capital  or  purpose.  Modern  jurists,  political  economists  and  stu- 
dents of  public  affairs  entertain  very  different  views  of  the  utility 
of  associated  capital: 

Judge  Caton :  "Corporations  have  become  among  the  great- 
est means  of  state  and  national  prosperity."  19  111.,  353. 

Judge  Gibson :    "The  combination  of  capital  for  purposes  of 

commerce,  or  to  carry  on  any  other  branch  of  industry,  although 

it  may  in  its  consequences  indirectly  operate  on  third  persons 

is  a  common  means  of  the  ordinary  course  of  human 

affairs  which  stimulates  to  competition  and  enables  men  to  engage 


in  undertakings  too  weighty  for  one  individual."  Commonwealth 
vs.  Carlisle,  1  Brightly. 

Another  Court  said:  "Associations  are  so  common  an  ele- 
ment, not  only  to  commerce,  but  to  all  affairs  of  life,  that  it  would 
be  rather  perilous  on  the  part  of  the  court  to  assert  that  they 
impair  competition,  destroy  emulation  and  diminish  exertion. 
There  is  scarcely  an  occupation  in  life,  scarcely  a  branch  of  trade 
from  the  very  largest  to  the  smallest,  that  does  not  feel  the  excit- 
ing and  invigorating  influence  of  this  wonderful  instrumentality." 
Jones  vs.  Fell,  5  Fla.  510. 

Judge  Field :  "As  a  matter  of  fact,  nearly  all  enterprises  in 
this  state,  requiring  for  their  execution  the  expenditure  of  large 
capital,  are  undertaken  by  corporations.  They  engage  in  com- 
merce ;  they  build  and  sail  ships ;  they  cover  our  navigable  streams 
with  steamers;  they  construct  houses;  they  bring  the  products  of 
earth  and  sea  to  market;  they  light  our  streets  and  buildings ;  they 
open  and  work  mines;  they  carry  water  into  our  cities;  they  build 
railroads  and  cross  mountains  and  deserts  with  them ;  they  erect 
churches,  colleges,  lyceums,  and  theaters;  they  set  up  manufac- 
tories, and  keep  the  spindle  and  shuttle  in  motion;  they  establish 
banks  for  savings ;  they  insure  against  accidents  on  land  and  sea ; 
they  give  policies  on  life;  they  make  money  exchanges  with  all 
parts  of  the  world;  they  publish  newspapers  and  books,  and  send 
news  by  lightning  across  the  continent  and  under  the  ocean.  In- 
deed, there  is  nothing  that  is  lawful  to  be  done  to  feed  and  clothe 
our  people,  to  beautify  and  adorn  their  dwellings,  to  relieve  the 
sick,  to  help  the  needy,  to  enrich  and  ennoble  humanity,  which 
is  not  to  a  great  extent  done  through  the  instrumentality  of  cor- 
porations." Eailroad  Tax  Cases,  13  Fed.  Eep.  743. 

John  Stuart  Mill  (Political  Economy,  Vol.  1,  p.  189,)  says: 
"When  markets  are  large  and  a  large  opening  for  exportation, 
large  systems  of  business  are  effective.  Large  establishments  are 
substituted  for  small  ones.  This  change  from  small  to  large  is 
wholly  beneficial.  It  may  have  some  drawbacks,  but  when  once 
the  system  of  large  establishments  is  established,  the  change  from 
large  to  larger  systems  is  an  unqualified  benefit." 

Again,  (p.  510): 

"The  progress  of  productive  arts  requiring  that  many  sorts 
of  industrial  occupations  should  be  carried  on  by  large  and  larger 
capitals,  the  productive  power  of  industry  must  suffer  by  what- 
ever impedes  the  formation  of  large  capitals  through  the  aggrega- 
tion of  smaller  ones." 

Henry  (r.  Carey  says : 

"That  the  more  perfect  the  power  of  association  the  greater 


the  power  of  production,  and  the  larger  the  proportion  of  the 
product  which  falls  to  the  laborer's  share." 

Professor  Sumner  says : 

"There  is  every  indication  that  we  are  to  see  new  develop- 
ments of  the  power  of  aggregated  capital  to  serve  civilization  and 
that  the  new  developments  will  be  made  right  here  in  America. 
Joint  stock  companies  are  yet  in  their  infancy;  and  incorporated 
capital,  instead  of  being  a  thing  which  can  be  overturned,  is  a 
thing  which  is  becoming  more  and  more  indispensable.  *  * 
Aggregated  capital  will  be  more  and  more  essential  to  the  per- 
formance of  our  social  tasks.  *  *  *  This  tendency  is  in  the 
public  interest.  *  *  *  We  are  to  see  the  development  of  the 
country  pushed  forward  at  an  unprecedented  rate  by  an  aggrega- 
tion of  capital,  and  a  systematic  application  of  it  under  the  direc- 
tion of  competent  men.  This  development  will  be  for  the  benefit 
of  all." 

While  it  is  now  generally  conceded  that  corporations  or  asso- 
ciated capital  are  a  necessary  part  of  our  trade  and  industrial 
system,  yet  it  is  sometimes  said  that  these  large  corporations, 
formed  by  the  consolidation  of  a  number  of  industrial  enterprises, 
with  their  great  capitalization  and  their  solidarity  of  manage- 
ment, will  prevent  competition,  create  monopoly,  be  hurtful  to 
labor,  and  thereby  prove  injurious  to  the  public.  Again,  it  may 
be  observed,  these  prophets  of  evil  are  forgetting  the  lessons  of 
history,  are  ignoring  the  changed  conditions  under  which  we  now 
live,  and  have  misused  terms. 

Eeplying  to  those  who  would  prevent  consolidations,  com- 
monly called  "trusts,"  I  maintain: 

Legislative  restrictions  upon  trade  have  always  proved  bane- 
ful, and,  in  most  cases,  have  only  aggravated  the  evils  they  sought 
to  prevent. 

Consolidations,  understood  as  the  amalgamation  of  a  number 
of  industrial  plants,  do  not  prevent  that  kind  of  competition 
which  is  beneficial  to  the  public,  and  do  not  create  monopolies. 

Consolidation,  instead  of  being  an  injury,  is  a  benefit  to  labor. 

Large  capitalization  is  a  relative  term,  and  considered  with 
reference  to  the  present  trade  conditions,  the  capital  employed 
is  not  larger  than  is  necessary  successfully  to  carry  on  such  enter- 
prises. 

Consolidations  are  the  outgrowth  and  the  symptom  of  the  ad- 
vancing civilization  of  to-day,  and  the  inevitable  tendency  of  its 
complex  trade  conditions. 

Eeverting  again  to  English  history,  we  find  the  ancient  pro- 
totype of  the  modern  statute  which  proposes  restraint  upon  trade. 

81 


In  1552  the  statute  of  5  and  6  Ed.  VI,  Cap.  14,  enumerates 
certain  offenses  against  trade,  under  the  titles  of  regrating,  fore- 
stalling and  ingrossing,  and  shows  that  even  prior  to  that  time 
such  laws  had  existed,  but  were  not  enforced.  Thus  it  begins : 

"Albeit  divers  good  statutes  heretofore  have  been  made 
against  f orestallers  of  merchandises  and  victuals,  yet  for  that  good 
laws  and  statutes  against  regrators  and  ingrossers  of  the  same 
things  have  not  been  heretofore  sufficiently  made  and  provided, 
and  also  for  that  it  hath  not  been  perfectly  known  what  person 
should  be  taken  for  a  forestaller,  regrator  or  ingrosser,  the  said 
statutes  have  not  taken  good  effect,  according  to  the  minds  of 
the  makers  thereof,  etc." 

Briefly  stated,  a  forestaller  was  denned  as  a  person  who  bought 
goods  when  they  were  on  their  way  to  market;  a  regrator  was  one 
who  bought  in  any  market  certain  food  products  and  victuals 
that  had  been  brought  to  market  to  sell,  and  sold  the  same  again 
in  the  same  market  or  any  other  market  within  four  miles  there- 
from; an  ingrosser  was  one  who  obtained  "by  buying,  contracting 
or  promise  taking"  any  "grain,  butter,  cheese,  fish  or  other  dead 
victuals  whatsoever,"  with  intent  to  sell  again. 

This  act  visited  severe  penalties  for  any  of  these  offenses,  the 
offender  on  a  third  conviction  being  set  on  the  pillory,  forfeiting 
all  his  goods  and  remaining  in  prison  during  the  king's  pleasure. 
These  laws  were  thought  necessary  in  the  infancy  of  trade  to  pre- 
serve competition.  The  statutes  of  that  age  abound  in  the  most 
minute  regulations  of  trade,  as,  for  example,  "An  act  for  stuffing 
of  feather  beds,  bolsters,  mattresses  and  cushions,"  (5  and  6  Edw. 
VI,  Cap.  23),  which  begins,  "For  the  avoiding  of  the  great  deceit 
used  and  practiced  in  stuffing  of  feather  beds,  bolsters,  pillows, 
mattresses,  cushions  and  quilts,"  etc. 

Under  the  statute  against  forestalling,  regrating  and  ingross- 
ing, many  prosecutions  were  had.  The  arguments  of  counsel  and 
the  opinions  of  the  courts  cover  almost  the  same  ground  now 
gone  over  in  the  attacks  upon  consolidation.  We  have  such  judges 
as  Lord  Eldon  and  Lord  Kenyon  pronouncing  tirades  from  the 
bench  against  these  crimes — crimes  forsooth — to  buy  goods  on 
the  way  to  market;  to  buy  goods  in  market  to  sell  again;  to  buy 
any  grain  or  food  stuffs  to  sell  again.  Thus  in  Eex  vs.  Eusby, 
(Peake's  Nisi  Prius  Cases,  189),  decided  in  1800,  Lord  Kenyon 
aired  his  views,  and  in  a  scathing  charge  to  the  jury  secured  the 
conviction  of  Rusby,  who  was  guilty  of  the  heinous  crime  of  buy- 
ing 250  bushels  of  oats,  and  selling  the  same  at  a  profit  of  six 
cents  a  bushel.  This  in  part  is  what  he  charged  the  jury : 

"This  case  presents  itself  to  your  notice  on  behalf  of  all  ranks, 


rich  and  poor,  but  more  especially  the  latter.  Though  in  a  state 
of  society  some  must  have  greater  comforts  and  luxuries  than 
others,  yet  all  should  have  the  necessaries  of  life;  and  if  the  poor 
cannot  exist,  in  vain  may  the  rich  look  for  happiness  and  pros- 
perity. *  *  * 

"The  law  has  not  been  disputed;  for  though  in  an  evil  hour 
all  the  statutes  which  had  been  existing  above  a  century  were  at 
one  blow  repealed,  yet,  thank  God,  the  provisions  of  the  common 
law  were  not  destroyed.  *  *  * 

"Even  amongst  the  laws  of  the  Saxons  are  to  be  found  many 
wise  provisions  against  forestalling  and  offenses  of  this  kind,  and 
those  laws  laid  the  foundation  of  our  common  law.  That  it  re- 
mains an  offense  nobody  has  controverted.  *  *  *  Specula- 
tion has  said  that  the  fear  of  such  an  offense  is  ridiculous,  and  a 
very  learned  man,  a  good  writer,  has  said  you  might  as  well  fear 
witchcraft.  I  wish  Dr.  Adam  Smith  had  lived  to  hear  the  evi- 
dence of  to-day,  and  then  he  would  have  seen  whether  such  an 
offense  exists,  and  whether  it  is  to  be  dreaded.  If  he  had  been  told 
that  cattle  and  corn  were  brought  to  market,  and  then  bought  by 
a  man  whose  purse  happened  to  be  longer  than  his  neighbor's, 
so  that  the  poor  man  who  walks  the  streets  and  earns  his  daily 
bread  by  his  daily  labor  could  get  none  but  through  his  hands,  and 
at  the  price  he  chose  to  demand;  that  it  had  been  raised  three 
pence,  six  pence,  nine  pence  and  more  per  quarter,  on  the  same 
day,  would  he  have  said  there  was  no  danger  from  such  an 
offense?" 

Just  think  of  it.  This  crime  was  nothing  more  than  what  is 
now  the  occupation  of  every  jobber,  broker,  and  wholesaler.  He 
bought  250  bushels  of  oats,  which  he  afterwards  sold  at  a  profit 
of  6  cents  a  bushel.  This  charge  was  given  after  the  passage  of 
the  Act  of  12  Greo.  III.,  c.  71,  repealing  the  laws  against  regrat- 
ing,  ingrossing,  forestalling,  etc.,  but  Lord  Kenyon  decided  that 
these  acts  were  common  law  offenses,  and  the  courts  generally  of 
that  date,  urged  thereto  by  the  clamor  of  the  masses,  still  con- 
tinued to  entertain  charges  of  this  character.  Men  who  were 
engaged  in  buying  grain  to  sell  again,  who  bought  in  market  to 
sell  again,  who  bought  goods  on  their  way  to  market  to  sell  again, 
were  prosecuted,  and  sometimes  convicted  and  punished.  It  was 
the  same  cry,  the  demand  for  free  competition,  the  protection  of 
the  weak  against  the  strong,  the  prevention  of  monopoly,  that  we 
now  hear.  At  last  Parliament,  by  7  &  8  Viet.  cap.  29,  in  response 
to  the  demand  of  a  more  enlightened  public  sentiment,  struck 
down  at  one  blow  about  forty  of  these  so-called  regulations,  after 


reciting  that  they  had  proved  an  injury  to  trade,  and  especially  to 
those  for  whose  protection  they  were  designed,  thus : 

""Whereas,  divers  statutes  have  been  from  time  to  time  made 
in  the  Parliaments  of  England,  Scotland,  Great  Britain  and 
Ireland,  respectively,  prohibiting  certain  dealings  in  wares, 
victuals,  merchandise  and  various  commodities,  by  the  names 
of  badgering,  forestalling,  regrating  and  ingrossing,  and  sub- 
jecting to  divers  punishments,  penalties  and  forfeitures  per- 
sons so  dealing :  And  whereas,  it  is  expedient  that  such  statutes, 
as  well  as  certain  other  statutes  made  in  hindrance  and  in  restraint 
of  trade,  be  repealed :  And  whereas,  an  act  of  the  Parliament  of 
Great  Britain  was  passed  in  the  twelfth  year  of  the  reign  of  King 
George  the  Third,  entitled  an  Act  for  repealing  several  laws  there- 
in mentioned  against  badgers,  ingrossers,  forestallers  and  regra- 
tors,  and  for  indemnifying  persons  against  prosecutions  for 
offenses  committed  against  the  said  acts,  whereby,  after  reciting 
that  it  had  been  found  by  experience  that  the  restraint  laid  by 
several  statutes  upon  the  dealing  in  corn,  meal,  flour,  cattle,  and 
sundry  other  sorts  of  victuals,  by  preventing  a  free  trade  in  the 
said  commodities,  have  a  tendency  to  discourage  the  growth  and 
to  enhance  the  price  of  the  same,  which  statutes,  if  put  in  execu- 
tion, would  bring  great  distress  upon  the  inhabitants  of  many 
parts  of  this  kingdom,  and  in  particular  upon  those  of  the  cities  of 
London  and  Westminster,"  *  *  * 

After  this  preamble  follows  the  most  sweeping  repeal  of  some 
forty  or  more  statutes  and  the  formal  declaration  that  badgering, 
ingrossing,  forestalling,  and  regrating  were  not  offenses,  and  no 
prosecutions  could  be  had  therefor. 

This  is  what  Buckle  (Vol.  I.,  p.  277)  says  of  the  laws  repealed 
by  the  above  statute,  and  of  like  amendments : 

"Every  European  Government  which  has  legislated  respecting 
trade  has  acted  as  if  its  main  object  were  to  suppress  the  trade  and 
ruin  the  traders.  Instead  of  leaving  the  national  industry  to  take 
its  own  course,  it  has  been  troubled  by  an  interminable  series  of 
regulations,  all  intended  for  its  good,  and  all  inflicting  serious 
harm.  To  such  a  height  has  this  been  carried  that  the  commer- 
cial reforms  which  have  distinguished  England  during  the  last 
twenty  years  have  solely  consisted  in  undoing  this  mischievous 
and  intrusive  legislation.  It  is  no  exaggeration  to  say  that  the 
history  of  the  commercial  legislation  of  Europe  presents  every 
possible  contrivance  for  hampering  the  energies  of  commerce.  In 
every  quarter  and  at  every  moment  the  hand  of  Government  was 
felt.  Bounties  to  raise  up  a  losing  trade  and  taxes  to  pull  down  a 
remunerative  one,  this  branch  of  industry  forbidden  and  that 

84 


branch  of  industry  encouraged.    Laws  to  regulate  wages,  laws  to 

regulate  prices,  laws  to  regulate  profits,  interference  with  mar- 
kets, interference  with  manufactories,  interference  with  machin- 
ery, interference  even  with  shops/' 

There  were  those,  and  they  were  in  the  majority,  who  looked 
to  these  regulations  as  their  only  protection,  and  who  thought  that 
society  would  be  overwhelmed  if  they  were  removed.  As  has 
been  shown,  learned  judges  shared  these  views;  yet  experience 
demonstrated  that  the  progress  of  trade  and  the  good  of  society 
were  hampered,  not  helped,  by  these  attempts  at  regulation. 
These  laws  and  decisions  were  made  at  the  time  when  trade  was 
primitive,  when  there  was  no  middleman,  when  the  producer  sold 
to  -the  consumer  direct.  They  were  intended  to  prevent  the  en- 
tree of  the  jobber,  the  wholesaler  and  the  broker  upon  the  stage 
of  commerce,  for  whose  entree  the  evolution  of  trade  had  given  the 
cue.  They  were  futile.  They  could  not  prevent  that  trade  pro- 
gression which  the  march  of  civilization  demanded.  They  could 
not  understand  that  nature's  law  of  competition  would  assert  its 
supremacy  in  the  more  complex  conditions  of  trade  that  accom- 
panied the  advent  of  the  middleman.  This  confounding  of  the 
prevalent  form  of  competition  with  the  principle  itself  has  been 
and  is  at  the  root  of  all  the  reactionary  attempts  to  restrict  trade 
by  law  from  that  day  to  this. 

It  may  with  propriety  be  assumed  that  at  seme  future  date 
the  student  of  events  will  clearly  see  that  the  attempts  of  to-day 
at  the  restriction  of  industrial  combinations,  which  are  also  steps 
in  the  evolution  of  trade,  were  as  unnecessary  and  as  ridiculous  as 
appear  to  us  those  laws  against  regrating,  forestalling,  and  in- 
grossing,  those  laws  which  sought  to  punish  the  middleman  as  a 
criminal.  Macaulay  was  truly  prophetic  when,  writing  of  the 
opposition  once  made  to  the  introduction  of  fast  stage  coaches  in 
England,  he  said :  "We  smile  at  these  things.  It  is  not  impos- 
sible that  our  descendants  when  they  read  the  opposition  offered 
by  cupidity  and  prejudice  to  the  improvements  of  the  nineteenth 
century,  may  smile  in  their  turn."  We  have  already  had  our 
laugh,  we  are  now  furnishing  means  for  the  amusement  of  onr  own 
descendants. 

If  consolidation  of  industrial  plants  prevented  competition 
and  created  monopolies,  all  thinking  men  would  condemn  them; 
but  if,  as  some  believe,  they  only  prevent  that  competition  which 
is  injurious  and  stimulate  that  competition  which  is  beneficial  to 
the  public,  then  instead  of  curses  they  are  blessings. 

It  is  never  justifiable  to  appeal  to  deep-seated  prejudices  by 
simply  using  terms  and  phrases  when  the  circumstances  do  not 

85 


warrant  the  application  of  such  terms.  Monopoly  is  offensive  to 
every  liberty-loving  people.  Even  the  word  arouses  antagonism 
from  every  fiber  of  a  freeman's  nature.  AVliy  is  this  so?  Mo- 
nopoly is  a  relic  of  tyranny,  and  was  one  of  the  most  odious  exer- 
cises of  tyranny.  Monopoly  was  thus  denned  by  Lord  Coke : 

"An  institution  or  allowance  by  the  King,  by  his  grant,  com- 
mission or  otherwise,  to  person  or  persons,  bodies  political  or  cor- 
porate, of  or  for  the  sole  buying,  selling,  making,  working  or 
using  of  anything  whereby  any  person  or  persons,  bodies  politic 
or  corporate,  are  sought  to  be  restrained  of  any  freedom  of  liberty 
they  had  before,  or  hindered  in  their  lawful  trade"  (7  Bacon's 
Abridgement,  22). 

The  Supreme  Court  of  the  United  States  defines  monopoly 
with  reference  to  present  conditions  thus : 

"The  withdrawing  of  that  which  is  a  common  right  from  the 
community  and  vesting  it  in  one  or  more  individuals,  to  the 
exclusion  of  all  others"  (Charles  River  Bridge  Case,  11  Peters, 
567). 

These  definitions  and  the  history  of  monopolies  in  England 
show  how  the  antipathy  to  monopoly  became  so  deep-seated  in 
the  Anglo-Saxon  mind;  and  how  and  why  the  mere  application  of 
the  term  creates  an  aversion  to  whatsoever  it  is  applied. 

Prior  to  1601,  when  they  were  successfully  assailed  in  the 
courts,  and  to  1624,  when  Parliament  declared  them  void,  there 
were  grants  of  monopoly  by  letters  patent  from  the  Crown, 
whereby,  for  favoritism  or  valuable  consideration,  certain  per- 
sons were  granted  the  exclusive  right  to  buy  and  sell  specified 
articles  of  trade,  or  the  exclusive  right  to  perform  certain  classes 
of  labor.  As  may  be  inferred,  the  power  to  confer  these  valuable 
rights  was  greatly  abused,  and  those  who  received  such  grants 
were  not  slow  to  misuse  their  privilege  by  extortionate  demands. 

Sir  John  Culpepper  thus  refers  to  the  English  monopolies : 

"Like  the  frogs  of  Egypt  they  have  gotten  possession  of  our 
dwellings,  and  we  have  scarce  a  room  free  from  them.  They  sup 
in  our  cup;  they  dip  in  our  dish;  they  sit  by  our  fires.  We  find 
them  in  the  dye  fat,  wash  bowl  and  powdering  tub.  They  share 
with  the  butler  in  his  box ;  they  will  not  bait  us  a  pin.  We  may 
not  buy  our  clothes  without  their  brokerage.  These  are  the 
leeches  that  have  sucked  the  Commonwealth  so  hard  that  it  is 
almost  hectical." 

Monopolies  cannot  be  created  by  association  or  agreement. 
We  now  have  no  letters  patent  giving  exclusive  right  except  under 
our  patent  laws  for  new  inventions  and  discoveries.  The  letters 
patent  of  old  creating  monopolies  were  of  the  same  character  as 


those  now  granted  to  the  discoverer  of  some  new  and  useful  in- 
vention. It  is  therefore  wholly  unjustifiable  to  use  the  term  mo- 
nopoly as  applied  to  the  effects  of  industrial  consolidation. 

"Competition  is  the  life  of  trade,"  is  a  saw  of  the  counting 
house  which,  like  many  others,  contains  a  minimum  of  truth  with 
a  maximum  of  error.  It  would  be  more  truthful  to  say  "Com- 
petition, as  generally  practiced,  if  the  life  of  trade,  is  the  death 
of  the  trader."  True  competition  does  not  mean  the  cut-throat 
methods  of  overreaching  that  once  prevailed,  where  rival  trades- 
men were  mortal  enemies;  nor  does  it  mean  that  the  better 
equipped  and  better  managed  establishment,  with  its  increasing 
trade  and  business,  must  sleep  by  the  roadside  of  commerce  until 
the  slow-going  and  non-progressive  competitor  catches  up. 
Competition  may  be  constructive  or  destructive.  The  true  and 
only  kind  of  competition  that  is  desirable  is  the  constructive, 
which  wins  by  decreasing  cost  or  improving  product. 

It  was  of  the  destructive  kind  of  competition  that  the  court 
^poke  in  Kellogg  vs.  Larkin,  3  Pinney,  150: 

"If  it  be  true,  also,  that  competition  is  the  life  of  trade,  it 
may  follow  such  premises  that  he  who  relaxes  competition  com- 
mits an  act  injurious  to  trade ;  and  not  only  so,  but  he  commits 
an  overt  act  of  treason  against  the  commonwealth.  But  I  ap- 
prehend that  it  is  not  true  that  competition  is  the  life  of  trade. 
On  the  contrary,  that  maxim  is  one  of  the  least  reliable  of  the 
host  we  may  pick  up  in  every  market  place.  It  is  in  fact  the 
shibboleth  of  mere  gambling  speculation,  and  is  hardly  entitled 
to  take  rank  as  an  axiom  in  the  jurisprudence  of  this  country.  I 
believe  universal  observation  will  attest  that  in  the  last  quarter  of 
a  century  competition  in  trade  has  caused  more  individual  distress 
than  the  want  of  competition. 

"Indeed,  by  reducing  prices  below  or  raising  them  above 
value  (as  the  nature  of  the  trade  permitted)  competition  had 
done  more  to  monopolize  trade,  or  to  secure  exclusive  advantages 
in  it,  than  has  been  done  by  contract.  Rivalry  in  trade  will 
destroy  itself,  and  rival  tradesmen  seek  to  remove  each  other, 
rarely  resorting  to  contract  unless  they  find  it  the  cheapest  mode 
of  putting  an  end  to  the  strife." 

In  the  case  of  Mogul  Steamship  Co.  vs.  McGreggor  (57  L. 
E.  Ex.  Cases,  541),  Lord  Coleridge,  upon  August  11,  1888,  deliv- 
ering an  opinion,  said :  "It  must  be  remembered  that  all  trade 
is,  and  must  be,  in  a  sense,  selfish.  Trade  not  being  infinite,  nay, 
the  trade  of  a  particular  place  or  district  being  possibly  very 
limited,  what  one  man  gains  another  man  loses.  In  the  hand-to- 
hand  war  of  commerce,  as  in  the  conflicts  of  public  life,  whether 

87 


at  the  bar,  in  Parliament,  in  medicine,  in  engineering,  men  fight 
on  without  much  thought  of  others,  except  a  desire  to  excel  or 
defeat  them.  Very  lofty  minds,  like  Sir  Philip  Sydney,  with  his 
cup  of  water  will  not  stoop  to  take  an  advantage  if  they  think 
another  wants  it  more.  Our  age,  in  spite  of  high  authority  to 
the  contrary,  is  not  without  its  Sir  Philip  Sydney,  but  these  are 
counsels  of  perfection  which  it  would  be  silly  indeed  to  make  the 
measure  of  the  rough  business  of  the  world,  as  pursued  by  ordi- 
nary men  of  business." 

Justice  Gray,  in  Leslie  vs.  Lorrillard  (11.0  N.  Y.  519),  says: 
"I  do  not  think  that  competition  is  invariably  a  public  bene- 
faction; for  it  may  be  carried  on  to  such  a  degree  as  to  become 
a  general  evil." 

That  competition  only  is  desirable  which  stimulates  to  cheap 
producing,  and  selling  at  a  reasonable  profit,  supplying  the  most 
for  the  money.  This  competition  need  not  be  direct,  it  may  be 
indirect ;  nay,  the  fear  of  competition  may  be  as  efficacious,  if  not 
more  so,  than  the  competition  itself.  To-day  the  whole  world  is 
one  market  place;  space  has  been  annihilated,  and  distance 
destroyed.  Communication  throughout  the  world  is  practically 
instantaneous.  The  manufacturer  of  one  place  or  country  is  a 
competitor  of  every  other  manufacturer  of  the  same  goods  in 
every  other  place  or  country.  The  capital  of  America  competes 
with  the  capital  of  every  country  on  the  globe,  and  so  the  capital 
of  every  country  on  the  globe  competes  with  the  capital  of 
America. 

No  consolidation,  however  large  the  proportion  of  any  particu- 
lar industry  it  may  have  absorbed,  dares  to  raise  prices  beyond 
the  point  where  an  inducement  is  made  to  other  capital  to  engage 
in  the  same  business — nay,  more  than  this,  I  maintain  that  no 
consolidation  can  continue  its  control  of  any  line  of  industry  un- 
less it  can  produce  and  supply  the  trade  with  its  product  at  a 
price  less  than  that  of  the  individual  competitor ;  this  because  of 
the  smaller  area  of  business  of  the  individual  competitor,  and  the 
element  of  personal  equation.  Direct  competition  from  those 
engaged  in  the  same  industry  not  only  can,  but  does,  confront 
every  large  aggregation  of  capital  in  every  line  of  business  in 
which  consolidations  have  been  formed.  And  experience  has 
shown  that  the  formation  of  consolidations  has  been  followed  in 
every  instance  by  new  capital  embarking  in  the  same  line  of 
industry  in  competition  with  the  consolidation.  Large  numbers 
engaged  in  the  same  industry,  some  competent,  some  otherwise, 
have  invariably  produced  seasons  of  very  high  and  very  low 
prices,  because  reasonable  regulation  of  such  trade  was  imprac- 


ticable,  and  capital,  even  when  necessary,  was  deterred  from  em- 
barking in  enterprises  subject  to  such  hazards.  The  organization 
of  a  consolidation  is  the  signal  that  wiser  counsels  will  prevail, 
and  forthwith  capital  seeks  the  opportunity  for  profitable  invest- 
ment. 

The  evil,  therefore,  of  high  prices,  or  rather  unreasonable 
profits,  is  reduced  to  a  minimum,  because  the  direct  competition 
of  those  in  the  business  exists,  and  judging  from  experience 
always  will  exist,  while  capital,  ever  eager  for  profitable  invest- 
ment, stands  like  a  watchdog,  guarding  the  public  against  exces- 
sive profits  by  other  capitalists. 

Every  well-managed  consolidation,  by  the  natural  laws  of 
trade,  must  result  in  reducing  the  cost  of  production  and  distri- 
bution. With  the  improperly' managed  consolidation  we  have 
nothing  to  do.  No  argument  for  or  against  consolidation  can  be 
predicated  thereon.  You  cannot  make  men  wise  or  competent  by 
legislation.  You  cannot  expect  counsels  of  perfection  from  im- 
perfect mortals.  We  can  only  reason  from  essential  features  of 
consolidation,  not  from  incidental  mistakes  made  by  incompetent 
management.  That  such  large  enterprises  reduce  the  cost  of 
production,  is  an  economic  fact  too  well  established  now  to  need 
further  authentication.  The  saving,  incident  to  the  handling  by 
one  company  of  ore,  in  and  from  the  mine  to  the  finished  steel 
structure  on  its  site,  as  compared  with  a  dozen  intermediaries, 
each  applying  more  or  less  of  skill,  and  each  claiming  more  or 
less  of  profit,  is  so  patent  as  to  require  statement  only.  Improve- 
ments in  processes,  there  being  no  obstacle  to  the  adoption  of 
the  latest  and  best ;  the  economies  from  standardization  of  wares ; 
continuous  operation  on  certain  goods,  and  the  consequent  op- 
portunity for  introducing  special  machinery;  savings  in  freight: 
and  facilities  and  capital  for  purchasing  in  any  quantity  to  pro- 
vide for  any  contingency,  are  advantages  only  available  to  large 
enterprises  with  abundant  capital  and  competent  management. 
The  cost  of  production  being  reduced,  the  cost  to  consumer  is 
reduced,  if  actual  competition,  or  the  fear  of  competition,  com- 
monly called  "potential  competition,"  prevents  the  consolida- 
tion from  demanding  unreasonable  returns.  This  proposition 
must  be  conceded,  unless  the  laws  of  trade  are  to  be  reversed, 
experience  is  to  go  for  naught,  and  history  is  to  be  denied. 

It  will  be  urged,  however,  that  the  cheapening  of  cost  will 
be  at  the  expense  of  the  laborer,  the  salesman  and  the  small  man- 
ufacturer. As  to  the  salesman  and  the  small  manufacturer,  it 
may  be  said  no  great  economic  change  can  take  place  without 
some  temporary  hardship,  and  the  benefit  of  the  public  is  a  higher 


consideration  than  the  temporary  inconvenience  of  a  compara- 
tive few.  But  there  is  another  answer  which  involves  no  conces- 
sion. The  statistics  show  that  of  those  engaged  in  business  or 
trade,  a  large  percentage  fail — about  ninety  per  cent.  This  goes 
to  prove  that  a  large  number  of  those  who  are  thus  supplanted 
by  the  consolidation  are  incompetent  to  engage  in  business,  and 
if  they  were  left  alone  would,  fail.  Many  such,  under  the  pro- 
tecting wings  of  the  consolidation,  with  the  benefit  of  the  better 
brains  at  the  helm,  earn  in  the  aggregate  much  more  than  they 
would  have  accumulated,  if  they  had  continued  as  sole  proprie- 
tors, without  the  benefit  of  the  better  brain  and  m'anagement  of 
the  experienced  and  selected  few. 

The  laborer  and  salesman  are  placed  in  a  more  favorable  posi- 
tion by  the  consolidation.  Under  the  system  of  individual  com- 
petition, with  its  eras  of  depression  and  overproduction,  its  shut- 
downs and  its  curtailment  of  output,  there  was  no  continuity  of 
employment.  At  one  time  every  available  man  was  engaged, 
capacities  of  plants  enlarged,  and  production  increased  until  be- 
yond the  demand ;  then  came  the  fall  in  prices,  the  bankruptcy  of 
plants,  the  shut-downs;  and  laborers,  salesmen,  clerks  and  other 
employes  were  thrown  out  of  employment,  sometimes  dependent 
upon  charity,  as  in  our  large  cities  a  few  years  since.  These  eras 
of  overproduction  were  not  infrequent.  This  is  changed  by  con- 
solidation. The  supply  and  demand  are  kept  approximate,  over- 
production is  jealously  avoided,  and  there  results  continuous  em- 
ployment. 

Another  consideration  for  the  laboring  man,  is  the  fact  that 
in  the  mad  race  of  competition,  where  individual  seeks  to  over- 
reach individual,  each  striving  to  reduce  his  cost  below  that  of 
his  competitor,  many  find  it  necessary  to  begin  their  reductions 
with  labor,  because  of  their  inability  to  take  advantage  of  other 
economies,  such  as  improved  machinerv  large  purchases  of  ma- 
te'rial,  etc.,  which  have  been  introduced  by  their  more  fortunate 
competitors,  and  thus  begins  the  reduction  of  wages  which  spreads 
from  factory  to  factory.  There  is  generally  abundance  of  labor 
in  the  different  industries,  frequently  a  surplus,  so  that  laborers 
compete  with  each  other  in  seeking  employment,  and  among  so 
many  employers  some  are  not  loath  to  take  advantage  of  this ;  and 
this  is  the  bane  of  labor  organizations  or  unions.  But  with  the 
well-regulated  consolidation,  earning  a  reasonable  profit,  the  la- 
borer will  be  safe,  he  will  be  organized  for  self-pr4otection,  and 
will  have  fewer  and  better  men  with  whom  to  deal.  He  will, 
therefore,  by  reason  of  the  better  regulation  of  supply  and  de- 
mand, be  continuously  employed,  and  his  greatest  curse,  inter- 

90 


mittent  employment,  with  seasons  of  idleness,  will  be  removed. 
Thus,  while  a  fewer  number  of  men  may  be  employed,  the  aggre- 
gate days  of  employment,  or  the  aggregate  amount  of  labor  em- 
ployed, will  be  greater.  There  are  those,  however,  who  contend 
and  not  without  good  authority,  that  the  consolidation,  by  reduc- 
ing the  price,  will  ultimately  increase  the  consumption,  and  there- 
by in  time  will  actually  employ  an  even  greater  number  of  men. 

On  the  whole,  with  or  without  consolidation,  no  more  labor 
will  be  employed  than  is  necessary  to  supply  the  goods  for  which 
there  is  demand.  Under  the  one  system,  the  supply  is  not  so 
well  regulated  to  the  demand,  as  under  the  other;  hence  recur 
seasons  of  shut-down  and  idleness.  The  consolidation  prevents 
this ;  hence  it  must  be  of  advantage  to  the  laborer.  The  history  of 
the  Standard  Oil  Company  is  an  excellent  illustration  of  this 
principle.  In  no  other  industry  employing  so  large  a  number  of 
men  has  the  working  man  had  so  continuous  employment  or 
better  wages  for  the  kind  of  work  performed. 

The  officers  of  the  great  labor  organizations  of  this  country, 
in  their  papers  read  before  this  convention,  have  almost  to  a  unit 
borne  witness  to  the  truth  of  the  above  assertions,  and  they  all 
speak  from  experience  when  they  favor  industrial  combinations. 

These  views  are  entertained  by  some  of  the  best  thinkers  and 
writers  on  political  economy.  Gunton  says : 

"If  it  is  true  that  the  concentration  of  capital  tends  to  dimin- 
ish the  cost  of  production  and  intensify  competition,  it  follows 
that  prices  will  fall  or  wages  will  rise,  or  both,  in  proportion  as 
large  enterprises  supplant  small  ones.  And  this  is  what  all  indus- 
trial history  shows  has  taken  place.  Take  for  example  the  cotton 
industry  in  this  country.  In  1831  there  were  801  cotton  manu- 
facturing establishments  with  an  average  capital  of  $50,702  each. 
*  *  *  The  ratio  of  consumption  of  cotton  cloth  to  popula- 
tion was  5.90  pounds  to  1,  and  the  price  of  cotton  cloth  17  cents 
per  yard.  In  1880  the  number  of  establishments  had  fallen  to 
756.  The  average  amount  of  capital  invested  in  establishments 
had  risen  from  $50,702  to  $275,403;  *  *  *  the  ratio  of  con- 
sumption of  cotton  cloth  to  the  population  was  13.90  pounds  to 
1 ;  and  the  price  of  cotton  cloth  was  7  cents  per  yard,  and  wages 
were  80  per  cent  higher.  It  will  thus  be  seen  that,  comparing 
1880  with  1831,  the  capital  invested  per  spindle  was  over  one- 
third  less,  the  number  of  spindles  operated  by  each  laborer  nearly 
three  times  as  large,  the  product  per  spindle  one-fourth  greater, 
the  product  per  dollar  invested  twice  as  large,  the  product  per 
laborer  employed  nearly  four  times  as  great,  the  price  of  cotton 
cloth  60  per  cent  less,  wages  80  per  cent  higher,  and  the  con- 

91 


sumption  of  cotton  cloth  per  capita  of  the  population  over  100 
per  cent  greater.  These  are  the  results  of  the  process  of  con- 
solidation into  large  capitals,  extending  over  half  a  century. 
What  is  true  of  this  industry  is  equally  true  of  all  industries  in 
proportion  as  the  concentration  of  capital  has  increased." 

Those  who  cry  loudest  for  legislation  point  to  certain  evils, 
charged  as  incident  to  consolidations,  and  demand  prevention  by 
law.  For  example,  the  watering  of  stock,  the  practice  of  reducing 
prices  for  the  express  purpose  of  crushing  a  rival,  and  then  raising 
prices  to  an  unreasonable  amount,  the  circulation  of  false  or  mis- 
leading reports  by  the  officers  of  such  associations,  for  the  pur- 
pose of  stock  speculations,  and  the  corrupting  of  legislatures  and 
municipal  bodies. 

These  evils  are  not  essential  incidents  to  consolidations,  they 
apply  equally  to  all  corporations.'  If  it  be  thought  that  these 
practices  can  be  stopped  by  legislation,  then  such  wise  and  tem- 
perate legislation  as  will  best  prevent  such  practices  might  well 
be  passed;  but  will  legislation  accomplish  this?  I  am  not  one 
of  those  who  think  that  you  can  legislate  morality  into  a  com- 
munity. Laws  receive  their  impulses  from  the  people.  The  im- 
pulses move  upward  from  the  people  to  the  law,  and  not  down- 
ward from  the  law  to  the  people.  Like  a  pyramid,  the  people 
are  the  base,  the  law  the  apex ;  the  pyramid  will  not  stand  inverted, 
nor  will  the  apex  stand  without  its  base.  For  these  immoral  and 
dishonest  practices  we  must  look  behind  the  statute  books,  behind 
the  courts,  behind  the  doors  of  the  counting-house — we  must  look 
into  the  consciences  of  men.  The  corporation  is  only  a  cloak  cov- 
ering the  men  on  whom  it  rests.  But  in  these  times,  concealed 
by  this  covering,  sometimes  called  a  legal  entity,  corporate  offi- 
cers, as  well  as  the  community,  have  established  a  code  of  morals 
different  from  that  by  which  individuals  are  governed  in  their 
personal  transactions.  Men  will  do  through  the  corporation,  or 
against  the  corporation,  what  they  would  shrink  from  doing  in  a 
personal  transaction.  This  false  moral  idea  is  not  limited  to  the 
man  in  the  corporation;  the  man  outside  of  the  corporation  is 
equally  guilty.  Claims  against  corporations,  or  demands  upon 
them,  are  made  that  would  never  be  made  upon  an  individual. 
This  is  due  to  a  depraved  and  diseased  moral  sentiment  of  the 
community.  It  is  a  false  standard  of  morality.  The  corporation 
is  no  thing  apart  from  the  stockholders.  It  is  a  society  of  men. 
An  aggregation  of  men.  The  officers  who  manage  its  affairs,  the 
shareholders  who  own  its  stock,  are  the  same  men  who  sit  by  you 
at  the  club  or  in  the  church.  Why  shall  they  be  held  to  one  code 
of  moral  responsibility  in  their  personal  conduct  and  to  another 

92 


code  in  their  conduct  as  officers  or  shareholders  of  a  corporation? 
We  see  the  same  men,  and  the  same  acts,  but  when  done  by  the 
corporation,  through  its  officer,  there  seems  to  be  a  kind  of  moral 
strabismus  in  the  eye  of  the  community,  which  looks  over  the  evil 
doer  to  the  thing  done,  and  sees  only  the  impersonal  agent,  the 
corporation,  through  which  the  evil  was  done.  We  are  confronted 
by  the  same  conditions  in  politics.  It  is  the  men  of  the  com- 
munity who  are  the  corporation,  the  men  of  the  community 
who  manage  the  corporation.  But  because  of  the  diseased  moral 
sense  of  the  community,  those  guilty  of  wrong  doing  as  officers, 
or  as  stockholders  of  corporations,  are  not  visited  with  the  con- 
demnation of  their  associates.  The  moralist  and  the  ethical 
teacher  must  deal  with  this  problem.  Visit  upon  the  offender 
the  reprobation  of  the  community  for  misdeeds  against  a  cor- 
poration, as  against  an  individual;  for  misdeeds  as  the  officer  or 
director  of  a  corporation,  just  as  for  his  acts  as  an  individual,  and 
if  the  moral  sense  of  the  community  is  high,  just  so  high  and  no 
higher  will  rise  the  conduct  of  those  dealing  with  or  for  corpora- 
-  tions. 

These  same  suggestions  apply  with  even  greater  force  to  the 
charge  that  these  large  aggregations  of  capital  tend  to  debauch 
politics  by  bribing  legislatures  and  municipal  governments.  This 
charge  presupposes  for  each  corporation  that  succeeds  in  bribing, 
a  large  number  of  persons  so  corrupt  that  they  will  accept  bribes. 
It  assumes  that  legislatures  and  municipal  bodies  can  be  bribed. 
If  this  be  true,  and  alas,  there  is  not  wanting  much  evidence  that 
gives  credibility  to  the  imputation,  the  remedy  surely  would  not 
be  to  suppress  the  corporation,  any  more  than  to  suppress  the 
legislature.  The  true  remedy  is  to  suppress  the  bribe  taker,  as 
well  as  the  bribe  giver.  This  can  only  be  done  by  improving  the 
moral  tone  of  the  community,  because,  after  all,  the  legislatures, 
the  municipal  councils,  aye,  the  corporations  of  a  community, 
rise  no  higher  and  sink  no  lower  in  their  moral  tone  than  the  gen- 
eral moral  tone  of  their  respective  communities.  This  may  seem 
an  unsavory  truth  in  this  day  of  recriminations,  but  it  is  still  a 
truth. 

The  capital  employed  in  the  enterprises  of  to-day  may  seem 
large  when  compared  with  the  amount  thus  employed  at  one  time, 
but  it  is  no  larger  in  proportion  than  are  the  transactions  of  this 
age  compared  with  those  of  former  ages.  Once  all  trade  was  cir- 
cumscribed, confined  within  small  territorial  areas,  due  to  lack  of 
facilities  for  transportation  and  communication.  The  market 
places  of  cities  and  towns  in  the  past  were  the  sole  marts  some- 
times of  whole  counties,  or  even  larger  districts.  To-day  what  is 

93 


the  situation?  The  price  of  a  loaf  of  bread  in  Chicago  is  affected 
by  a  rumor  of  war  in  Asia,  and  the  world's  exchange  goes  up  or 
down  in  accordance  with  the  result  of  negotiations  for  a  loan  in 
Japan.  Everything  of  importance  occurring  in  the  most  remote 
portions  of  the  world  affects  trade  for  good  or  evil  in  every  other 
portion.  Eumors  of  war  or  peace,  the  discovery  of  mineral  de- 
posits, a  new  and  useful  invention  in  any  part  of  the  world,  reacts 
upon  every  other  part.  The  whole  world  is  every  man's  market. 
Transactions  involving  sums  equal  to  a  king's  ransom  are  now  of 
almost  daily  occurrence,  and  millions  are  now  exchanged  where 
hundreds  once  sufficed.  Contracts  for  the  supply  of  material 
involving  tens  of  millions  of  dollars  are  not  infrequent.  The 
amount  of  capital  employed  in  any  enterprise  signifies  nothing 
except  the  magnitude  of  our  dealings.  These  enormous  amounts 
are  not  limited  to  companies  formed  by  consolidation;  they  arc 
likewise  employed  in  business  enterprise  increased  from  small  be- 
ginnings, by  natural  accretions,  to  keep  step  with  the  industrial 
progress  and  demands  of  the  time. 

The  unification  of  the  world  into  a  single  market  place  has 
come  to  pass  through  no  human  design,  but  as  the  natural  result 
of  improved  facilities  in  transportation  and  communication.  A 
man  to-day  in  any  part  of  the  world  may  be  in  daily  touch  with 
his  business,  however  remote ;  and  with  the  markets  in  every  other 
portion  of  the  globe.  These  changed  conditions  have  caused  like 
changes  in  methods  of  business.  Trade  and  commerce  never  lag 
behind  the  train  of  progress  and  improvement ;  they  keep  apace, 
sometimes  they  are  in  the  van.  Those  who  would  prevent  these 
vast  aggregations  of  capital,  would  turn  back  the  hands  on  the 
dial  of  civilization.  They  would  seek  to  prevent  the  natural, 
inevitable  tendency  which  has  been  superinduced  by  the  exigen- 
cies of  trade,  and  made  imperative  by  the  complex  and  compli- 
cated commerce  of  the  world.  Consolidations  in  industrial  enter- 
prises, large  aggregations  of  capital,  are  not  sudden  creations, 
they  are  growths,  forced  upon  the  world  "by  the  law  of  progress. 
They  are  here  by  no  man's  fiat;  thev  can  be  driven  away  by  no 
human  agency.  They  are  natural — inevitable — necessary. 

Consolidation  is  the  protest  of  capital  against  extinction.  Con- 
solidations were  formed  in  self-defense.  They  <rew  up  by  force 
of  competition,  to  avoid  destruction  by  competition.  If  the 
smaller  and  weaker  had  not  combined  to  battle  with  the  larger 
and  stronger,  they  were  doomed  to  annihilation.  As  the  indi- 
vidual enterprise,  whether  partnership  or  corporate,  grew  and 
prospered,  and  added  to  its  strength  and  power,  appropriating 
more  and  more  of  a  given  trade,  the  trade  of  smaller  concerns  was 

94 


thereby  contracted,  and  if  consolidation  or  combination  had  been 
denied,  they  would  have  been  eliminated  by  the  more  powerful 
rival.  By  combination  they  at  one  step  placed  themselves  in  posi- 
tion to  compete  and  to  hold  their  own.  To  many  concerns  it  was 
a  choice  between  consolidation  and  insolvency.  To  many  a  pro- 
prietor it  was  a  choice  between  losing  all,  going  out  of  business, 
or  remaining  in  business  as  a  stockholder  in  the  larger  company, 
and  saving  his  accumulations.  Through  consolidations  and  the 
consequent  large  stock  issues,  the  public  are  given  opportunity 
to  become  stockholders,  and  thus  share  in  the  profits  and  indus- 
tries which  formerly  were  closed  to  general  investment.  The  suc- 
cessful manufacturer  enlarged  and  increased  his  plant,  but  the 
ownership  generally  remained  a  family  affair.  Many  of  the  multi- 
millionaires of  this  country  thus  accumulated  their  wealth. 
There  is  no  reason  why  skilled  laborers  receiving  good  wages,  as 
well  as  others  connected  with  the  business,  should  not  become 
sharers  in  the  profits  they  help  to  earn,  by  acquiring  an  interest 
in  the  business  in  this  way. 

I  come  from  Pittsburgh,  a  city  where  sit  enthroned  old  King 
Coal  and  new  King  Steel.  Consolidations  have  been  effected  in 
that  section  in  almost  every  line  of  industry.  Smoke  is  issuing 
from  every  stack,  fires  are  burning  in  every  furnace.  Labor  was 
never  so  well  paid  nor  so  much  employed.  Trade  was  never  so 
good,  times  so  prosperous,  nor  the  outlook  so  favorable.  Have 
not  consolidations  and  these  vast  aggregations  of  capital  some- 
thing to  do  with  this  ?  How  otherwise  could  we  have  taken  such 
stupendous  contracts  for  the  supply  of  iron  and  steel  in  Europe, 
Kussia,  China,  Japan,  Australia,  Africa — in  fact  all  over  the 
world?  What  could  the  ordinary  industrial  concern  do  with  a 
six  million  dollar  order  for  a  railway  in  Eussia  ?  The  public  never 
was  so  well  served  as  now,  never  supplied  with  better  goods  nor  a 
greater  variety,  never  supplied  so  promptly  and  so  efficiently. 

Would  those  who  decry  consolidation  have  this  growing,  pros- 
perous, industrial  nation,  with  an  inventive  genius  the  greatest 
in  the  world,  and  an  adaptability  never  before  approached,  lie 
down  in  the  ruin  of  its  industries  and  hand  over  its  trade  to  other 
nations — nations  that  are  now  madly  striving  for  the  same?  Herr 
Krupp  is  not  so  far  behind,  nor  other  German  manufacturers. 
England,  with  her  gigantic  industries  (many  the  fruits  of  com- 
bination and  consolidation,  which  she  has  never  discouraged  since 
she  learned  the  errors  of  her  ways),  has  not  yet  surrendered  the 
marts  of  the  world  to  her  American  competitor. 

America  has  only  recently  been  taught  the  lesson  of  the  power 
for  good  of  these  great  industrial  plants.  She  is  making  good  use 

95 


of  this  knowledge  now  in  securing  her  portion  of  the  world's  trade. 
These  great  aggregations  of  capital,  created  by  combination  and 
consolidation,  have  grown  up  among  us,  not  without  cause;  they 
are  the  effect  of  the  natural  evolution  of  trade  and  commerce. 
They  are  steps,  steps  only,  in  the  industrial  progress  of  the  pres- 
ent civilization.  To  what  they  will  ultimately  lead,  we  may  specu- 
late, but  we  cannot  know.  Natural  laws — stronger,  greater,  high- 
er than  those  of  man's  creation — will  control  them  for  good  or 
ill.  We  touch  them  at  our  peril.  We  may  help,  we  may  hinder, 
the  working  of  these  higher  influences.  He  would  indeed  be  a 
wise  prophet  who  could  now  foretell  whither  we  are  tending.  No 
mortal  eye  can  at  one  glance  foresee  the  complex  markets  of  the 
world.  No  human  mind  can  at  any  instant  comprehend  the  trade 
conditions  of  the  globe.  Such  sight  and  such  comprehension  are 
imperative  if  legislation  touching  the  mainsprings  of  trade  is  to 
be  intelligently  framed.  We  are  in  the  presence  of  stupendous 
forces,  set  in  motion  by  unseen  power.  As  in  the  past,  so  in  the 
future,  the  operation  of  natural  laws  will  lead  to  that  result  which 
is  best.  I  am  one  of  those  who  have  not  lost  confidence  in  natural 
law,  and  am  content  to  let  the  God  of  evolution  work  out  this 
great  problem  of  the  age.  But  in  the  light  of  history  we  may 
enquire,  "Will  trade,  like  man,  play  his  part  upon  the  world's 
stage, 'his  acts  being  seven  ages' ?"  Or  has  he  more?  There  was 
an  infancy  of  trade  we  know,  a  time  when  exchange  was  made  in 
kind.  So,  too,  we  may  recall  another  time,  still  an  infancy, 
though  then  'twas  thought  that  trade  had  grown  mature — when 
to  buy,  to  sell  again,  was  deemed  a  crime.  How  now  we  laugh  at 
those  toys  of  laws.  Yet  then,  men  were  imprisoned  for  their  in- 
fraction. Since  then,  how  great  has  grown  this  child  of  trade, 
how  strong,  how  large!  And  yet  who  knows  but  'tis  a  "whining 
school-boy"  still,  and  the  generations  yet  to  come  will  have  their 
laugh  on  us,  if  we,  too,  err  by  assuming  trade  to  be  mature.  Trade 
mature?  Who  dares  assert  civilization  has  passed  the  zenith,  and 
that  the  shadows  now  point  from  west  to  east?  Concurrent  and 
co-extensive  with  the  growth  of  civilization  will  be  the  growth 
of  trade.  When  you  can  say  civilization  grows  no  more,  then, 
too,  you  may  say  the  same  of  trade,  but  not  till  then. 

The  Committee  on  Organization  and  Program  was  named  as 

follows : 

ALABAMA. — Eyre  Damar.  DELAWARE. — Charles  F.  Richard. 

ARIZONA. — J.  C.  Adams.  DISTRICT  OF  COLUMBIA. — Joseph 
ARKANSAS. — Jefferson  Davis.  Nimmo,  Jr. 

CALIFORNIA. — Charles  D.  Willard.  FLORIDA. — John    Franklin    Forbes. 

COLORADO. — Henry  V.  Johnson.  IDAHO. — Judge  Claggett. 


ILLINOIS. — Lorin  C.  Collins.  NEW     JERSEY. — Edward     Quinton 
INDIANA. — John  L.  Griffiths.  Keasbey. 

IOWA.— T.  D.  Healy.  NEW  MEXICO.— Frank  Springer. 

KANSAS. — John  E.  Hessin.  NEW  YORK. — Stephen  P.  Corliss. 

KENTUCKY. — W.  B.  Fleming.  NORTH  DAKOTA. — A.  W.  Edwards. 

LOUISIANA. — William  Wirt  Howe.  OHIO. — Charles  Foster. 

MAINE. — A.  E.  Rogers.  OREGON. — E.  Hofer. 

MARYLAND. — Maj.  John  I.  Yellott.  PENNSYLVANIA. — H.  W.  Palmer. 

MASSACHUSETTS. — John   S.   Clark.  SOUTH    CAROLINA. — A.    C.    Kauf- 
MICHIGAN. — George  W.  McBride!          man. 

MINNESOTA. — W.  W.  Folwell.  SOUTH      DAKOTA.      —      Freeman 
MISSISSIPPI. — J.  W.  Cutrer.  Knowles. 

MISSOURI. — F.  C.  Farr.  TENNESSEE. — John  W.  Gaines. 

MONTANA. — H.  H.  Swain.  TEXAS. — A.  B.  Davidson. 

NEBRASKA. — R.  D.  Sutherland.  UTAH. — George  W.  Bartch. 

NEVADA. — Francis  G.  Newlands.  WEST  VIRGINIA. — John  W.  Harris. 

NEW     HAMPSHIRE.  —  Henry     W.  WISCONSIN. — A.  M.  Jones. 

Blair.  WYOMING. — C.  P.  Arnold. 

NATIONAL  ASSOCIATION  OF  MANUFACTURERS. — Theodore  C.  Search, 
.  President. 

NORTHWESTERN  TRAVELING  MEN'S  ASSOCIATION. — George  J!  Reed. 

AMERICAN  FEDERATION  OF  LABOR.— Samuel  Gompers,  President. 

BROTHERHOOD  OF  RAILROAD  TRAINMEN. — P.  H.  Morrissey,  Grand  Master. 

UNITED  GARMENT  WORKERS  OF  AMERICA. — Henry  White,  General  Sec. 

SINGLE  TAX  LEAGUE  OF  THE  UNITED  STATES. — F.  H.  Monroe. 

ORDER  OF  RAILWAY  CONDUCTORS. — E.  E.  Clark,  Grand  Chief  Conductor. 

BROTHERHOOD  OF  LOCOMOTIVE  FIREMEN. — W.  S.  Carter. 

NATIONAL  GRANGE  PATRONS  OF  HUSBANDRY. — H.  E.  Huxley. 

ILLINOIS  COMMERCIAL  MEN'S  ASSOCIATION. — George  H.  Holden. 

NEW  ENGLAND  FREE  TRADE  LEAGUE. — Byron  W.  Holt. 

AMERICAN  ACADEMY  OF  POLITICAL  AND  SOCIAL  SCIENCE. — Edmund  J. 
James. 

NATIONAL  ALLIANCE  THEATRICAL  STAGE  EMPLOYES. — Lee  M.  Hart,  Gen- 
eral Secretary  and  Treasurer. 

NATIONAL  BUSINESS  MEN'S  LEAGUE. — John  W.  Ela. 

AMERICAN  ANTI-TRUST  LEAGUE. — M.  L.  Lockwood,  President. 

KNIGHTS  OF  LABOR. — I.  D.  Chamberlain. 

UNITED  STATES  EXPORT  ASSOCIATION. — Francis  B.  Thurber.  President. 

COMMERCIAL  TRAVELERS'  NATIONAL  LEAGUE.— P.  E.  Dowe.  President. 

NATIONAL  GRAIN  GROWERS'  ASSOCIATION. — S.  H.  Greeley. 

NATIONAL  FARMERS'  ALLIANCE  AND  INDUSTRIAL  UNION  OF  AMERICA. — 
J.  C.  Hanley. 

NATIONAL  TAX  LEAGUE. — Lawson  Purdy. 

NATIONAL  SOCIALISTS'  LEAGUE. — A.  M.  Simons. 

BRICKLAYERS'  AND  MASONS'  UNION  OF  AMERICA. — M.  R.  Grady. 

MILLERS'  NATIONAL  ASSOCIATION. — F.  H.  Magdeburg. 

ASSOCIATION  OF  WESTERN  MANUFACTURERS.- — George  Brickner. 

AMERICAN  SOCIAL  SCIENCE  ASSOCIATION. — Wm.  A.  Giles. 

FARMERS'  NATIONAL  CONGRESS. — John  M.  Stahl,  Secretary. 

INTERNATIONAL  TYPOGRAPHICAL  UNION. — Samuel  B.  Donnelly,  President. 

TRAVELING  MEN'S  PROTECTIVE  ASSOCIATION. — M.  W.  Phalen,  President. 

EX-OFFICIO. — Franklin  H.  Head.  President  Civic  Federation  of  Chicago. 
Ralph  M.  Easley,  Secretary,  Civic  Federation  of  Chicago. 

The  conference  took  a  recess  until  8  o'clock. 

97 


EVENING  SESSION,  SEPTEMBER  13. 

Chairman  Head  called  the  session  to  order  promptly  at 
8  o'clock,  and  introduced  Governor  George  W.  Atkinson  of  West 
Virginia,  who  said: 

G.  W.  ATKINSON. 

Governor  of  West  Virginia. 

This  gathering,  as  I  understand  it,  is  to  consider  the  relations 
of  our  citizens  to  one  another  as  citizens,  and  to  consider  also  the 
best  methods  to  be  used  to  protect  the  masses  from  the  encroach- 
ments of  combines  and  trusts,  for  it  seems  that  this  is  a  period 
favorable  to  the  organization  of  such  combines  all  over  the  civil- 
ized world. 

I  believe  in  progression.  In  this  respect  I  am  an  evolutionist. 
I  believe  that  the  world  ought  to  grow,  and  that  men  ought  to 
grow  with  it.  Some  sorts  of  combines  are,  I  think,  economic 
necessities  which  grow  out  of  our  complex  civilization  as  a  nation. 
The  great  manufacturing  establishments  of  the  world,  covering 
all  branches  of  industry,  had  very  small  beginnings ;  and  we,  in  a 
large  measure,  owe  the  progress  we  have  made  to  men  of  means 
who  combined  or  united  into  what  we  call  "corporations"  to  make 
this  advancement  possible.  But  there  is  a  vast  difference  be- 
tween an  ordinary  corporation  and  a  trust.  It  seems  to  me  that 
every  citizen  who  possesses  any  sort  of  common  sense  will  favor 
corporations,  because  individual  citizens,  as  a  rule,  cannot  in  and 
of  themselves  alone  furnish  sufficient  capital  to  develop  the  re- 
sources of  any  of  the  states  of  our  republic.  It  requires  vast 
sums  of  money  to  handle  great  undertakings.  One  man  alone 
cannot  supply  the  necessary  capital  to  build  up  great  industries, 
which  have  for  their  object  the  development  of  a  state  or  a  nation ; 
but  several  men  of  means,  by  combining,  can  raise  the  necessary 
amount  of  capital  to  accomplish  the  desired  purpose.  This 
necessity  brought  corporations  into  existence.  What  one  man  can- 
not do,  for  lack  of  means,  several  men  can  accomplish  by  uniting 
the  capital  which  all  of  them  can  command.  In  this  way  corpo- 
rations are  formed.  In  this  manner  railroads  are  constructed, 
mines  are  opened,  mills  and  factories  are  built,  industries  are 
established,  men  are  employed,  and  the  natural  resources  of  a 
country  are  developed,  which  necessarily  employ  labor  and  thu? 
bring  wealth  into  a  country.  Hence  I  say  that  every  citizen  of  a 
country  who  possesses  ordinary  common  sense  should  be  favorable 


to  corporations.  Nevertheless,  we  have  in  our  midst  thousands 
and  tens  of  thousands  of  our  people  who  seem  to  hate  them  and 
fight  them  on  every  hand,  notwithstanding  the  fact  that  they 
secure  from  such  concerns  reasonable  compensation  for  their  toil, 
and  by  means  of  which  they  obtain  a  proper  support  for  them- 
selves and  those  dependent  upon  them.  With  this  class  of  peo- 
ple, my  fellow  citizens,  I  have  no  sort  of  sympathy.  I  assert  here 
to-day  that  a  corporation  properly  conducted  is  entitled  to  as 
much  sympathy,  support  and  respect  as  an  individual,  because  a 
corporation  in  law  is  an  individual.  I  wish  therefore  to  be  writ- 
ten down,  my  countrymen,  as  a  friend  and  backer  of  corpora- 
tions, because  no  state  can  be  developed  without  them,  and  there 
can  be  no  growth  and  development  if  they  are  inhibited  by  law 
or  are  not  supported  properly  by  the  people.  Without  corpora- 
tions to-day  we  would  be  without  railroads,  coal  and  coke  opera- 
tions, silver  and  gold  producers,  banks  and  other  acknowledged 
necessities  for  the  public  weal.  Therefore,  Mr.  Chairman,  when 
I  hear  men  in  politics  and  elsewhere  whining  the  demagogue  cry, 
"Down  with  corporations,"  I  am  ready  to  join  the  crowd  of  enter- 
prising people  who  will  cry  from  the  hustings  and  the  housetops, 
"Down  with  that  class  of  malcontents  and  demagogues!"  I  am 
not  an  optimist  per  se,  nor  am  I  a  pessimist.  I  have  no  sympathy 
for  any  one  who  puts  in  his  time  whining  against  capital.  We 
unfortunately  have,  however,  too  many  of  this  class  of  croakers  in 
our  midst.  What  we  need  is  more  capital  in  legitimate  business 
undertakings.  We  must  have  men  everywhere  who  will  invest 
their  money  in  building  up  and  opening  up  the  industries  of  all  of 
our  states.  We  have  in  West  Virginia  more  coal  and  coke  and  oil 
and  gas  and  timber  than  the  United  States  can  consume  in  hun- 
dreds of  years.  What  we  now  most  need  is  capital  to  help  us  on 
in  our  work  of  development.  We  are  ready  and  willing  to  wel- 
come to  our  domain  men  of  enterprise  and  means  from  all  sections 
of  the  Union,  and  from  abroad  as  well,  to  come  among  us  and  aid 
us  in  developing  the  resources  which  a  wise  and  beneficent  Provi- 
dence has  bestowed  upon  us,  and  which  are  open  to  all  comers. 

West  Virginia,  my  friends,  is  the  first  oil  and  gas  and  timber 
state  in  the  Union.  She  is  second  in  coke,  and  third  in  coal. 
She  has  more  coal  area  than  any  other  state,  and  it  is  only  a  matter 
of  limited  time  for  her  to  be  first  in  coal  and  coke  production,  as 
she  is  now  first  in  oil  and  gas  and  timber,  because  the  coal  and 
coke  business  is  after  all  only  a  question  of  the  survival  of  the 
fittest.  With  more  veins  of  coal  than  any  other  state,  and  all  or 
mostly  all  of  a  better  quality  than  any  of  cur  competitors,  espe- 
cially for  gas  and  steam  and  heat  and  coke,  we  are  bound  to  hold 

99 


our  own,  and  in  the  end  come  out  on  top  of  any  and  all  competi- 
tors. Hence  I  again  say,  3Ir.  President,  that  West  Virginians 
generally  are  friendly  to  corporations,  and  we  will  and  do  wel- 
come men  of  means  to  come  among  us,  and  thus  help  them  and  us 
not  only  "to  keep  the  wolf  from  the  door,"  but  at  the  same  time 
to  aid  us  to  lay  up  a  surplus  for  "rainy  days"  which  will  sooner  or 
later  come  to  one  and  all.  We  welcome,  therefore,  corporations 
and  capital,  because  they  help  us  as  West  Virginians  to  build  for 
both  the  present  and  the  future. 

Xow,  I  take  it,  Mr.  President,  that  all  present  understand  how 
I  feel  toward  capitalists  and  toward  corporations  which  always 
represent  capital  and  capitalists.  The  next  point  to  which  I 
desire  briefly  to  allude  is  the  "labor  problem."  I  am  now  and 
always  have  been  a  stanch  friend  of  the  toiling  masses.  I  stand 
for  the  workingman  because  he  alone  produces  wealth.  He  takes 
the  iron  ore,  the  coal,  the  oil,  the  gas,  the  precious  metals,  the 
lead,  the  zinc,  etc.,  out  of  the  bowels  of  the  earth,  and  by  his  skill 
transforms  them  from  the  natural  to  the  finished  product.  In 
this  way  he  produces  wealth.  In  the  same  manner  he  brings  out 
of  mother  earth  the  necessary  articles  for  the  sustenance  of  man- 
kind. He  alone,  therefore,  is  a  wealth  producer.  Why,  then, 
should  he  not  have  our  honest,  earnest  support?  I  say  unhesi- 
tatingly that  he  has  my  best  wishes. 

Labor  and  capital  are  interdependent.  One  cannot  get  on 
without  the  other.  The  laboring  men  have  the  same  right  to 
organize  for  their  advancement  and  protection  as  have  the  cap- 
italists. The  same  privileges  must  be  extended  to  one  class  as  to 
the  other.  So  long  as  the  laboring  man  does  his  duty  and  keeps 
within  the  limits  of  the  law,  he  will  have  my  sympathy  and  sup- 
port. But  I  have  never  yet  favored  a  strike  or  a  lockout  so  long 
as  it  was  possible  to  prevent  it  by  just  and  friendly  arbitration; 
and  I  have  never  yet  known,  and  I  say  it  boldly,  a  strike  or  a  lock- 
out, in  all  my  experience  and  observations,  that  did  not  result 
in  injury  to  both  labor  and  capital.  Therefore,  Mr.  Chairman, 
I  favor  arbitration  to  settle  all  disputed  problems  between  capital 
on  the  one  hand  and  labor  on  the  other. 

While  I  stand  here  as  a  representative  of  the  common  people, 
and  insist  that  they  should  be  properly  treated,  yet  I  confess 
that  there  are  other  trusts  in  this  country  than  money  trusts. 
Laboring  men  have  their  organizations,  as  I  have  hitherto  stated 
they  ought  to  have,  and  are  entitled  to  have.  But  somehow,  how- 
ever, a  portion  of  these  organizations  have  not  taken  properly  into 
account  the  strife  and  loss  of  time  to  themselves  and  their  em- 
ployers occasioned  by  strikes  which  they  have  seen  fit  to  bring 

100 


upon  themselves.  There  are,  therefore,  not  only  capital  trusts  but 
there  are  sometimes  labor  trusts  also.  I  wish  to  place  myself 
on  record  against  both,  and  especially  so  when  the  demands  of 
either  or  both  are  not  in  accord  with  the  well  established  rules 
of  political  economy  and  common  sense  and  common  honesty 
between  man  and  man,  whether  rich  or  poor,  black  or  white. 
Laboring  men  have  no  more  right  to  combine  for  the  purpose  of 
sustaining  that  which  is  unjust  and  unreasonable  than  capital- 
ists. Hence  I  wish  to  declare  here  and  now  that  arbitration  alone 
can  properly  adjust  controversies  of  this  sort,  and  the  man  who 
opposes  this  kind  of  adjustment  is  wholly  out  of  joint  with  the 
spirit  of  the  times  in  which  he  lives.  Capital  and  labor  should 
deal  fairly  with  each  other,  and  if  they  cannot  at  all  times  agree, 
let  the  controversy  be  arbitrated  by  a  just,  fair,  unbiased  and 
honorable  tribunal.  No  conservative,  honest  man,  in  my  judg- 
ment, can  or  will  oppose  such  adjustment. 

This  brings  me,  Mr.  President,  to  a  brief  consideration  of 
trusts,  which  is  the  main  question  before  this  Federation.  In 
all  of  my  private  and  public  acts  in  the  past,  my  "musket"  has 
always  been -pointed  against  trusts,  and  if  I  know  myself  to-day, 
it  is  still  pointing  the  same  way.  It  seems  that  our  country  has, 
within  the  past  few  years,  gone  trust  crazy.  I  cannot  understand 
why,  but  it  appears  to  be  a  fact.  Nevertheless,  this  lunacy  fad, 
if  I  may  call  it  such,  is  not  confined  to  this  country  alone.  It 
is  just  now  reaping  a  harvest  everywhere  and  in  all  lands.  Nor 
is  it  confined  to  any  one  political  party.  I  find  about  as  many 
Democrats  in  trusts  in  the  United  States  as  Eepublicans,  and  I 
find  at  least  two  of  the  mammoth  trusts  of  this  country  are,  in 
a  sense,  Democratic  trusts.  Therefore,  I  conclude,  Mr.  Chair- 
man, that  we  cannot  choke  them  out  by  drawing  political  lines 
upon  them.  They  have  grown  up  as  the  result  of  existing  condi- 
tions, and  they  cannot  be  stamped  out  by  any  and  all  political 
parties  simply  resolving  against  them.  To  sweep  the  trust  issue 
into  politics,  and  resolve  one  way  or  the  other,  as  is  the  custom 
now-a-days  in  political  conventions  so  to  do,  it  seems  to  me,  is 
"wasting  fragrance  on  the  desert  air."  We  must  come  nearer 
home  for  a  remedy  than  that.  We  must  hit  at  its  taproot  by 
national  and  state  legislation,  by  making  it  a  penal  offense  against 
good  government  for  men  of  great  wealth  to  combine  for  the  sole 
purpose  of  stifling  and  choking  middle-men  and  small  dealers, 
as  trust?  have  generally  done  in  the  past. 

Or,  better  still.,  if  the  trusts  would  take  their  employees  into 
their  combines  and  their  confidence,  and  will,  after  paying  a  rea- 
sonable dividend  on  the  actual  amount  of  capital  stock  invested, 

101 


and  then  agree  to  distribute  a  reasonable  share  of  the  profits 
among  the  skilled  artisans  whom  they  employ  as  a  per  cent  or 
profit  upon  their  wages,  the  trusts  would  then  be  placed  upon  an 
honest,  popular  and  reasonable  foundation,  and  no  one  could 
complain  or  justly  oppose  them.  I  can  see  no  reason  why  such 
an  experiment  may  not  be  made  by  employers,  nor  can  I  see  why 
it  would  not  succeed.-  To  do  this  would  bring  about  harmony 
to  a  large  degree  between  labor  and  capital,  and  would  liK-asuni- 
bly — though  not  entirely — take  the  fangs  out  of  the  trust  and 
the  combine.  This  is  one  of  the  ways,  and  it  seems  to  me  to  be  the 
logical  way,  to  settle  this  ever-existing  controversy,  and  settle  it 
right,  because  it  would  then  be  a  just,  and,  I  may  say,  enlightened 
co-operation,  and  you  all  know  that  co-operation  is  the  funda- 
mental principle  of  a  trust.  It  is,  in  short,  the  very  heart  of  it. 
The  trouble,  however,  with  the  most  of  the  trusts  as  they  are 
now  conducted  is  that  the  "co-operation"  is  all  one-sided — all 
in  favor  of  the  stockholders,  while  the  skilled  laborers  and  the 
consumers  are  wholly  ignored.  This  seems  to  be  the  funda- 
mental principle — the  foundation,  so  to  speak,  on  which  the  en- 
tire trust  movement  rests.  Why,  then,  cannot  its  scope  be  wid- 
ened so  as  to  take  in  or  embrace  all  the  classes  whose  interests 
are  involved?  So  long  as  the  trust  now  stands,  and  so  long  as  it 
is  thus  conducted,  that  long  it  will  be  antagonized  by  the  masses, 
and  it  therefore  cannot  be  enduring,  nor  can  it  result  as  a  per- 
manent, profitable  investment  for  the  stockholders,  or  can  it  in 
any  way  benefit  the  mechanics  or  the  people  in  general. 

Mr.  President,  I  do  not  wish  to  be  understood  as  opposing 
modern  methods  of  progress.  I  believe  in  conserving  in  every 
possible  manner  the  waste  of  time  and  energy  of  the  great  mass 
of  our  people.  The  day  of  wooden  plows  and  stage  coaches  and 
horseback  mails  have  gone  by  forever.  To  keep  abreast  of  the 
times  in  which  we  live,  we  must  use  all  modern  discoveries  and 
appliances.  We  must  of  necessity  "keep  in  the  push"  or  other- 
wise perish.  All  wise  people  will  strive  to  reduce  every  possible 
waste  of  energy.  The  blacksmith  shop  and  the  wooden  plow  were 
good  enough  in  their  day.  They  answered  the  purpose  then, 
but  they  are  out  of  date  now.  Old  methods  have  been  steadily 
discarded,  and  economical  appliances,  operated  by  steam  and 
electricity,  have  been  substituted  therefor.  The  same  is  true 
in  almost  every  business  avocation  peculiar  to  our  people.  The 
trust  seems,  on  its  face,  to  be  a  step  forward  in  the  ever-shifting 
drama  of  growth  and  progress.  It  claims  as  its  main  purpose 
to  save  waste  in  production  and  distribution.  Every  student  of 
political  economy  will  admit,  in  a  measure,  the  force  of  this  par- 

102 


ticular  claim,  because  the  greatest  enemy  to  human  progress  is 
waste.  While  it  may  be  true  that  a  number  of  factories  in  a 
particular  industry,  which  have  been  competing  with  one  another 
in  a  particular  line  of  production,  agree  to  unite  for  a  common 
purpose,  consenting  to  not  fight  one  another,  and  purposing  to 
furnish  a  particular  article  of  manufacture  to  the  consumer  at  a 
specific  price,  of  itself  is  not  necessarily  wrong.  Indeed,  on  its 
face  it  appears  to  be  right ;  but  it  may  be  wrong — forever  wrong 
— and  usually  is  wrong,  as  I  see  it,  for  two  especial  reasons :  First : 
This  combine  can  and  will  (if  they  are  looking  out  for  their  own 
interests  alone)  increase  the  price  of  their  product  to  the  con- 
sumer, and  at  the  same  time  cut  the  wages  of  their  employees; 
and,  second,  every  small  manufacturer  engaged  in  that  particular 
industry  will  either  have  to  quit  business  or  join  "the  combine." 
But  the  combine  will  doubtless  say  in  reply  that  the  small  manu- 
facturer can  himself  join  the  trust,  or  keep  on  as  he  is  then  doing, 
if  he  likes.  How,  I  ask,  can  he  continue  his  business  success- 
fully, if  all  of  his  competitors  in  the  same  line  of  production  have 
combined  against  him?  They  can  and  will  for  the  purpose  of 
"freezing  him  out"  cut  prices  until  he  has  "to  squeal  and  throw 
up  the  sponge,"  and  then  the  combine  has  its  own  way  and  can 
fix  its  own  prices,  and  it  usually  does  so,  and  all  of  you  who  hear 
me  know  it  and  know  it  well.  In  cases  of  this  sort,  the  small 
dealer  succumbs,  and  the  combine  or  trust  fixes  its  own  prices  and 
the  people  are  compelled  to  submit. 

Nevertheless,  Mr.  Chairman  and  gentlemen,  I  confess  I  am 
one  of  the  common  people  of  this  country  who  is  not  hysterical 
over  this  trust  controversy.  I  am  inclined  to  the  opinion  that  it 
can  and  will  be  regulated  by  wise  and  proper  legislation,  and  by 
public  sentiment,  which  in  the  end  always  settles  matters  of  this 
sort.  All  political  economists  agree  that  the  prevention  of  waste 
(unnecessary  waste)  by  all  nations  is  the  secret  of  their  growth 
and  success.  This  proposition  is  unquestionably  true,  and  I  will 
not  therefore  undertake  to  controvert  it.  A  wise  man  will  save 
every  cent,  every  dime,  every  lump  of  coal,  every  particle  of 
manure,  everything  that  can  be  utilized  to.  better  his  condition 
and  help  him  on  in  life.  But  it  seems  to  me  that  no  intelligent 
man  will  favor  any  measure  which  will  place  him  at  the  mercy 
of  a  few  of  his  fellow-citizens  who  will  have  it  in  their  power 
to  say  what  he  shall  do,  or  what  he  shall  pay  for  that  which  neces- 
sity requires  him  to  purchase. 

I  am  aware  of  the  fact,  Mr.  President,  that  the  backers  of 
trusts  set  up  three  distinct  claims  or  arguments  in  their  defense, 
viz :  First,  that  they  pay  the  highest  rates  of  wages  to  their  em- 

103 


ployees;  second,  that  they  furnish  the  best  articles  to  the  con- 
sumer; and,  third,  that  they  furnish  them  lower  or  cheaper  than 
they  can  otherwise  he  produced.  While  I  admit  that  there  is 
something  in  these  claims,  yet  they  are  true  only  in  a  restricted 
sense.  The  first  of  these  claims  is,  I  think,  absolutely  true. 
Trusts  pay  big  wages  because  they  employ  none  but  high  grade 
men  and  women,  which  they  can  afford  to  do.  The  second  propo- 
sition is  perhaps  true  in  most  cases,  but  by  no  means  in  all.  The 
third  claim  is  only  true  in  a  few  instances.  If  I  had  the  time 
to-day  I  could  definitely  mention  them  to  this  Federation.  But 
in  the  generality  of  cases,  prices  to  consumers  increase  instead  of 
diminish  where  trusts  are  enforced.  Therefore  the  few,  and  not 
the  many,  are  the  direct  beneficiaries  of  these  trust  combines. 
Consequently,  my  countrymen,  when  one  pauses  and  carefully 
considers  all  the  facts  involved;  when  he  thoughtfully  weighs 
both  sides  of  the  issue  before  him;  when  he  seriously  reflects,  as 
it  is  the  duty  of  every  good  citizen  so  to  do;  when  he  sees  the 
vast  multitude  of  his  fellow  countrymen  who  have  fitted  them- 
selves by  education  and  experience  as  "middle-men"  in  the  vari- 
ous avocations  of  life,  necessarily  thrown  out  of  employment  be- 
cause of  trusts ;  and  when  he  goes  farther  and  thinks  of  the  thou- 
sands and  tens  of  thousands  of  his  fellow-countrymen  of  limited 
means,  yet  at  the  same  time  industrious,  sober  and  enterprising, 
who  cannot,  because  of  their  limited  resources,  cope  with  the 
trusts  and  the  combines,  and  are  necessarily  forced  to  quit  busi- 
ness, then  the  enormity  of  the  wrong  (not  to  say  crime)  of  chok- 
ing them  out  of  an  honest  effort  to  support  themselves  and  fam- 
ilies, can  be  fully  understood  and  fully  appreciated. 

If  the  advocates  of  and  participants  in  the  trusts  could  satisfy 
the  masses  upon  the  following  propositions,  they  would  then  have 
but  limited  opposition  in  the  years  to  come,  viz. :  First,  Will  you 
and  can  you,  in  all  cases,  as  you  claim,  agree  to  furnish  a  better 
and  cheaper  article  to  consumers  of  all  the  necessaries  of  life  cov- 
ered by  your  trusts  and  combines?  Second,  What  do  you  propose 
to  do  with  the  tens  of  thousands  of  middle-men  now  employed, 
who  of  necessity  must  lose  their  present  positions?  And,  third, 
what  will  become  of  the  "small  dealers"  scattered  over  our  coun- 
try from  Maine  to  Florida,  and  from  the  surges  of  the  Atlantic 
to  the  Sunset  Sea  whose  waves  make  music  in  the  golden  sands 
of  California?  What  are  you  going  to  do  with  this  large  class 
of  our  fellow  citizens  who  are  now  prosperous  and  happy  in  their 
present  occupations?  These  are  momentous  problems,  and  in- 
volve momentous  results. 

I  may  be  wrong,  Mr.  President,  in  my  conclusions;  but  it 

104 


HORATIO  W.   SEYMOUR 
FRANCIS  G.  NEWLANDS 
CYRUS  G.  LUCE 


J.  STERLING  MORTON 
MARTIN  A.  KNAPP 
ROBERT  S.  TAYLOR 


seems  to  me,  as  an  unprejudiced,  unbiased  American  citizen, 
whose  only  purpose  is  to  do  what  he  can  to  advance  the  interests 
of  the  great  majority  of  all  our  people,  that  if  the  trust  idea  is  to 
be  carried  out  in  this  country,  there  will  be  no  use  for  middle-men 
among  us;  and  the  small  dealers  and  small  manufacturers  and 
small  operators  in  any  and  all  lines  of  business,  who  are  now  earn- 
ing honest  livings  and  supports  for  themselves  and  those  de- 
pendent upon  them,  will  be  things  absolutely  of  the  past.  Like 
Othello,  their  "occupations  will  be  gone."  And  what  of  the  other 
and  the  greatest  of  all  the  considerations  before  us  as  non-partisan 
American  citizens,  viz. :  Will  the  trusts,  can  the  trusts,  dare  the 
trusts  here  agree  to  furnish  to  the  great  living,  helpless,  and  in 
many  instances  hapless  mass  of  our  people,  a  better  and  a  cheaper 
article  which  all  of  them  must  of  necessity  use,  than  they  are  now 
required  to  pay  for  the  same  ?  If  the  trust  can  do  this,  I  will  call 
off  my  opposition,  feeble  as  it  is,  and  will  join  them  and  bid  them 
Godspeed  in  their  work.  Otherwise,  I  am  against  them,  and  I 
desire  that  they  will  here  and  now  class  me  as  an  enemy.  It  is  not 
my  purpose  or  desire,  my  fellow  citizens,  to  block  any  avenue 
to  the  progress  and  development  of  my  country;  but  it  is  my 
purpose  and  desire  to  do  anything  and  everything  that  I  can  to 
prevent  capital  from  overslaughing  labor,  and  to  do  my  utmost  at 
all  times  and  under  all  circumstances  to  aid  the  workingman  to 
earn  an  honest  livelihood  for  himself  and  those  dependent  upon 
him  in  the  ever-existing  scuffle  between  man  and  man  to  live  and 
let  live,  which  has  been  going  on  from  Adam  down  to  McKinley. 

John  W.  Gaines  of  Tennessee  announced  that  the  committee 
on  organization  and  program  nominated  as  permanent  officers 
of  the  conference: 

Chairman,  William  Wirt  Howe  of  Louisiana;  First  Vice- 
Chairman,  Dudley  G.  Wooten  of  Texas;  Second  Vice-Chairman, 
H.  V.  Johnson  of  Colorado ;  Third  Vice-Chairman,  S.  P.  Corliss 
of  New  York;  Secretary,  Ealph  M.  Easley  of  Chicago. 

The  committee  recommended  the  adoption  of  the  following 
rules : 

The  conference  shall  hold  three  daily  sessions,  from  10  a.  m. 
to  1  p.  m.,  from  3  p.  m.  to  5  p.  m.,  from  8  p.  m.  until  such  time 
as  adjournment  may  be  had.  That  all  papers  or  addresses  shall 
be  limited  to  twenty  minutes;  that  Jefferson's  Manual  and 

105 


Robert's  Rules  of  Order  and  general  parliamentary  law  shall 
be  the  rules  of  this  body.  That  no  proxies  be  allowed. 

It  was  recommended  that  the  vice-chairmen  preside  over  the 
conference  on  the  succeeding  days  in  their  regular  order. 

The  committee  further  recommended  the  appointment  of  a 
committee  whose  duty  should  be  to  prepare  a  program  for  each 
session  and  provide  rules  governing  special  conditions,  and 
recommended  as  such  committee: 

Henry  W.  Blair,  New  Hampshire;  L.  D.  Sutherland, 
Nebraska;  J.  W.  Gaines,  Tennessee;  J.  C.  Hanley,  Minnesota; 
A.  B.  Davidson,  Texas,  and  Chairman  Howe  and  Secretary  Easley, 
ex-officio. 

On  motion  of  Cockran,  New  York,  seconded  by  Garland, 
Pennsylvania,  the  committee  report  was  adopted  without  a  dis- 
senting vote. 

Temporary  Chairman  Head  introduced  William  Wirt  Howe 
as  his  successor,  and  in  accepting  the  gavel  Mr.  Howe  briefly 
thanked  the  delegates  for  the  honor  conferred  upon  him,  and 
promised  to  preside  with  impartiality.  He  introduced  Attorney- 
General  E.  C.  Crow  of  Missouri : 

E.  C.  CROW. 

Attorney-General  of  Missouri. 

All  now  admit  that  trusts  must,  if  they  exist,  be  regulated  in 
order  to  protect  the  individual  interests  from  the  combined  inter- 
est of  the  trusts;  but  will  regulations  successfully  protect  the 
public  from  the  evil  influence  of  the  trust  organization? 

That  trusts  when  operating  illegally  can  be  restrained  and  dis- 
solved by  the  process  of  the  state  courts,  has  been  demonstrated 
in  Missouri  by  the  decision  of  the  highest  court  in  the  state.  But 
the  loose  and  easy  process  of  creating  a  legal  corporate  entity  ren- 
ders it  practicable  to  form  trust  corporations  by  the  score  daily, 
while  to  demolish  or  restrain  a  trust  often  requires  from  one  to 
three  years  of  an  expensive  and  hard  fought  legal  battle  by  the 
state.  These  reasons  urge  us  to  look  for  a  remedy  that  will  pre- 
vent the  formation  of  trusts,  on  the  principle  that  it  is  more 
practicable  to  prevent  an  evil  than  to  remedy  it  after  it  exists. 

The  individual  was  the  primary  basis  of  all  business.  It  early 
became  evident,  however,  that  associations  cf  individuals,  combin- 

106 


ing  their  capital  and  efforts,  would  be  advantageous  in  a  business 
way,  and  this  gave  rise  to  partnerships.  Copartnerships  thus 
took  the  place  of  individual  effort  and  capital,  and  made  possible 
larger  enterprises.  Under  the  laws  of  this  country  the  individual 
members  of  a  partnership  are  compelled  to  respond  with  their 
individual  fortunes  for  any  liability  of  the  partnership  incurred 
in  the  prosecution  of  the  partnership  after  the  assets  of  the  firm 
have  been  exhausted.  This  financial  responsibility  is  a  natural 
limitation  on  partnership  enterprises,  because  of  the  desire  of 
every  man  to  limit  his  liabilities  and  protect  himself  from  bank- 
ruptcy. An  instrument  of  business  that  would  enable  men  more 
widely  to  extend  their  business  enterprises,  with  larger 
opportunities  for  profit,  and  less  personal  liability,  was 
something  eagerly  sought,  and  it  has  been  found  in  the 
modern  private  business  corporation.  In  the  private  trading  cor- 
poration, with  fullpaid  capital  stock,  no  individual  liability  of 
shareholder  exists  for4 liabilities  of  the  corporation,  and  no  matter 
how  great  the  loss  a  corporation  sustains,  or  how  entirely  bank- 
rupt it  becomes,  the  individual  fortune  of  the  fullpaid  stock- 
holder is  fully  protected.  Thus  it  will  be  seen  at  once  the  mod- 
ern private  business  corporation  makes  possible  the  wildest  of 
speculations  by  the  corporate  entity,  with  the  absolute  guarantee 
to  the  shareholders  of  non-liability  beyond  the  amount  of  the  full 
paid  stock. 

In  a  partnership  enterprise  the  business  may  employ  only  a 
small  portion  of  the  capital  of  the  individual,  and  but  little  of 
his  personal  time  or  effort,  yet  he  stakes  his  financial  all  in  the 
business — his  good  name,  his  possessions,  his  prospective  acquire- 
ments, all  stand  sponsor  for  every  liability  of  the  partnership. 
On  the  other  hand,  a  corporation  risks  nothing  but  the  capital 
which  it  employs.  Its  field  is  as  wide  as  civilization,  and  while 
it  is  not  exactly  immortal,  yet  death  coming  to  its  members  does 
not  dissolve  the  corporation.  It  is  an  intangible  and  an  impalp- 
able creation  of  the  law,  with  unlimited  powers  and  limited  liabili- 
ties. It  may  have  conveyed  to  it  all  the  property,  plants,  business 
and  rights  of  several  corporations  for  the  purpose  of  uniting  all 
the  different  competing  concerns  under  one  management  and 
thereby  reduce  expenses.  This  legal  status  which  marks  the 
broad  distinction  between  partnerships  and  the  liabilities  thereof, 
and  corporations  and  the  liabilities  thereof,  should  be  clearly 
borne  in  mind  in  dealing  with  the  modern  monopoly  or  trust. 
For  the  financial  reasons  above  set  out,  the  most  perfect  and  com- 
plete modern  trust  takes  the  shape  of  a  corporation,  to  which  is 
conveyed  the  property  and  the  business  of  the  various  individuals 

107 


and  corporations  that  are  to  form  the  trust.  A  majority  of  stock 
in  the  corporation  is  most  frequently  controlled  by  two  or  three 
persons,  thus  giving  the  vast  powers  and  business  interests  of  per- 
haps an  hundred  firms  and  corporations  in  a  single  line  of  busi- 
ness into  the  complete  control  of  two  or  three  individuals,  who 
by  directing  the  destiny  of  the  corporate  entity  whose  stock  they 
own  absolutely  dominate  the  single  line  of  business. 

The  chief  reason  why  the  modern  trust  takes  the  corporate 
form  is  the  financial  one,  to-wit:  Eelief  from  individual  liability 
of  the  stock  owners  of  the  trust  beyond  the  value  of  the  stock 
owned  by  them.  A  corporate  trust  monopoly  stands  to  win  all 
the  profits  that  may  result  from  combined  capital,  crushing  and 
destroying  competition,  while  each  stockholder  is  free  from  the 
chance  of  sharing  with  his  personal  fortune  any  of  the  loss  that 
may  come  by  business  failure  of  the  trust.  On  the  other  hand, 
each  member  of  a  partnership  or  association  of  persons  not  incor- 
porated who  organize  or  attempt  to  organize  a  trust,  stands  with 
his  personal  fortune  to  share  individually  the  losses  of  the  com- 
bine if  losses  exist. 

In  dealing  with  the  question  of  private  business  corporations 
it  should  be  clearly  borne  in  mind  that  a  private  corporation 'is 
purely  a  creature  of  law.  It  is  supposed  to  be  created  because  of 
a  public  policy  that  demands  combinations  of  citizens  and  capital 
to  be  clothed  with  corporate  form  to  subserve  the  public  good,  and 
in  the  subservance  of  the  public  good  can  be  found  the  only 
justification  for  the  creation  of  private  corporations.  The  usual 
argument  put  forward  to  justify  the  organization  of  private  cor- 
porations is  that  in  this  way  may  be  combined  the  efforts  and 
capital  of  many  individuals  who  carry  forward  enterprises  of 
public  utility  which  are  beyond  the  ability  of  natural  persons, 
whether  acting  as  individuals  or  as  a  partnership.  If  this  institu- 
tion were  strictly  applied  it  would  abolish  the  private  business 
trading  corporation,  and  would  restrict  corporate  organizations 
to  those  of  a  public  or  quasi  public  nature  only.  But  the  laws  of 
all  the  states  have,  as  I  believe,  unwisely  encouraged  the  forma- 
tion or  organization  of  corporations  to  invade  every  field  o'f  busi- 
ness enterprise,  thus  placing  the  individual  at  a  disadvantage  in 
his  single  efforts  to  carry  on  any  line  of  business  as  against  the 
combination  of  individuals  in  the  guise  of  a  corporation,  which 
has  special  powers,  privileges  and  advantages  given  it  by  law 
which  the  natural  citizen  can  not  have,  and  instead  of  the  public 
necessity  being  applied  as  the  true  test  for  the  right  of  corporate 
Organization,  we  have  now  substituted  simply  the  desire  for  pri- 
vate gain  and  the  elusion  of  personal  responsibility,  and  these  are 

108 


the  sole  motives  that  actuate  in  the  organization  of  the  business 
corporation  of  to-day.  To  these  loose  incorporation  laws  and  the 
irresponsibility  connected  with  the  owning  of  shares  of  stock  in 
private  business  corporations  I  attribute  the  great  growth  of  the 
modern  corporate  trust.  The  struggle  in  all  the  commercial  world 
has  ever  been,  and  ever  will  be,  to  secure  the  greatest  opportunity 
for  profit  with  the  least  amount  of  liability  to  loss.  The  legal  status 
of  the  owner  of  the  stock  in  a  private  business  corporation  pre- 
sents exactly  this  opportunity.  The  present  public  policy  of  the 
states  is  against  the  organization  and  existence  of  trusts,  as  shown 
by  the  anti-trust  laws  enacted  recently;  but  the  policy  of  the  cor- 
porate laws  of  the  various  states  has  been  to  allow  loose  control  of 
corporations.  The  result  is  that  when  the  people  start  to  con- 
trol trust  corporations  they  are  met  with  a  system  of  loose  corpo- 
ration laws,  builded  up  by  years  of  legislation  when  little  was 
thought  of  the  effect  of  the  corporate  power  on  {he  business  and 
property  of  citizens,  and  hence  it  is  discovered  that  our  corporate 
laws  must  be  remodeled. 

The  corporation  being  the  creature  of  the  state  and  possessing 
only  the  power  given  it  by  the  state,  it  should  never  be  allowed  to 
so  act  or  conduct  its  business  as  to  interfere  with  the  interests  of 
the  public.  There  should  be  no  particular  inducement  for  the 
people,  through  their  state  government,  to  give  men  a  portion  of 
the  power  of  the  state  through  a  corporate  charter  if  the  public 
interest  is  not  to  be  subserved.  On  the  other  hand,  if  the  public 
interest  is  to  be  injured  there  exists  the  strongest  of  reasons  for 
the  withholding  of  a  corporate  charter  surrendering  to  the  cor- 
porators a  part  of  the  sovereignty  of  the  people.  Formerly  the 
interests  of  common  carriers  and  other  similar  miblic  and  quasi 
public  employments  were  not  nearly  so  important  as  now.  To- 
day the  railroad  employees  of  America  number  upward  of  a 
million  of  men.  Those  employed  in  other  business  of  the  same 
or  similar  public  character  aggregate  a  very  large  number.  These 
public  or  quasi  public  employments  touch  and  directly  affect  and 
shape  to  a  greater  or  less  extent  the  daily  and  hourly  life  and 
interests  of  the  entire  population  of  our  country. 

How  directly  do  the  steam  and  street  railways,  the  telegraph 
and  the  telephone,  the  express  and  steamship  companies,  the 
waterworks,  gas,  light,  turnpike,  bridge,  elevator,  pipe  line,  bank 
and  trust  companies  affect  the  interest,  prosperity  and  property 
of  every  citizen?  A  clear  and  full  appreciation  of  the  complete 
protection  of  the  right  to  contract,  and  of  the  vested  rights  of 
property  is  absolutely  essential  to  be  kept  in  mind  in  order  to  have 
a  fair  view  of  the  trust  question  and  its  effect  on  our  people  and 

109 


the  remedies  that  may  be  proposed  for  any  evil  that  may  result 
from  monopolies.  The  courts  and  the  legislatures  assert  the 
right  to  regulate,  restrain  and  dissolve  trusts  and  monopolies  to 
control  trade,  because  trusts  and  monopolies  are  injurious  to  the 
public  interests.  The  opponents  of  the  anti-trust  laws  argue  that 
such  control  and  restraint  interferes  with  the  right  of  freedom  to 
contract  and  the  perfect  right  one  should  possess  to  dispose  of  his 
own  property  and  manage  his  own  business  as  he  pleases.  The 
argument  is  also  advanced  by  opponents  of  anti-trust  legislation 
that  the  logical  and  natural  result  of  the  interference  of  the  state 
with  the  full  freedom  of  the  right  to  contract  and  the  right  of 
disposition  of  property  will  be  the  sure  and  speedy  enactment  of 
laws  to  correct  the  inequality  of  wealth  which  exists  among  men, 
and  to  legally  establish  the  balance  by  taking,  through  legal  proc- 
esses, from  those  who  have  too  much  in  order  to  give  to  those  who 
have  not  enough,  and  that  this  course  of  legislation  will  soon  be 
followed  by  laws  making  land  and  capital,  which  are  the  requisites 
of  labor  and  the  source  of  all  wealth  and  culture,  the  common 
property  of  society  upon  the  principle  that  the  public  welfare  de- 
mands that  land  and  capital  be  so  managed  as  to  confer  the  great- 
est benefit  on  the  greatest  number. 

In  this  way  the  opponents  of  anti-trust  legislation  say  we  will 
be  led  speedily  into  socialism.  The  argument  is  made  that  the 
right  to  sell  at  the  seller's  own  price  only  involves  the  right  to 
contract,  and  is  as  much  property  as  land  or  money.  But  this 
argument  overlooks  the  fact  that  while  the  seller  may  have  a  right 
to  freely  dispose  of  his  property,  yet  the  buyer  has  a  right,  or 
should  have,  to  buy  in  an  open  market.  It  overlooks  the  further 
fact  that  no  man  has  a  natural  right  or  title  to  the  possession  of 
land  or  property,  but  that  the  right  is  given  him  by  law.  It  also 
overlooks  the  fact  that  in  all  ages  of  the  world  and  under  all  forms 
of  government  the  will  of  the  individual  has  been  subordinated  to 
the  will  of  society.  This  argument  loses  sight  of  the  fact  that 
the  right  to  contract  is  a  relative,  and  not  .an  absolute  right. 

Thus  looking  at  the  condition  of  affairs  on  this  question  we 
see  presented  on  one  side  the  spectacle  of  the  masses  of  the  peo- 
ple demanding~that  legal  control  of  monopolies  be  immediate  and 
drastic,  and  that  special  privileges  be  taken  from  combined 
wealth,  clothed  with  corporate  form,  and  equal  opportunities  in 
the  business  world  be  everywhere  substituted;  while  on  the  other 
side  the  organized  capital  of  the  country  stands  seeking  shelter 
and  protection  under  the  sacred  constitutional  rights  of  property 
and  freedom  in  making  contracts  and  carrying  on  business,  and 
loudly  proclaiming  that  interference  by  legislation  with  their 

no 


private  business,  rights  and  privileges  means  the  opening  of  the 
door  to  the  abolition  of  the  private  ownership  of  property  and  the 
entrance  upon  an  era  of  socialism  which  must  soon  wreck  our 
government.  There  is  a  genuine  note  of  warning  on  either  side 
in  this  controversy.  That  the  monopoly  corporation,  which  is 
but  a  creature  of  the  state,  must  yield  to  whatever  extent  the 
public  demands  is  evident,  because  corporations  can  never  be 
above  the  law,  and  as  creatures  of  it  must  always  be  subject  to 
the  law.  But,  as  has  been  well  said,  in  our  regard  for  private  right 
we  must  not  perpetuate  public  wrongs.  "The  commonwealth  is 
greater  than  the  corporation  it  creates.  The  Constitution  has 
made  trade  free  in  the  United  States.  It  must  not  be  so  inter- 
preted as  to  make  monopoly  supreme  throughout  a  land  dedi- 
cated to  freedom."  The  mere  fact  of  the  combination  is  not  itself 
so  objectionable  in  public  opinion,  but  the  fact  that  under  our 
law  the  few  and  not  all  have  been  enabled  to  enjoy  the  benefits 
of  combination  makes  combines  especially  obnoxious.  The  ben- 
efits of  combination  must  be  secured  for  all  or  removed  from 
all.  Equality  before  the  law,  equal  privileges  for  all  and  special 
benefits  to  none,  are  cardinal  principles  of  American  liberty  that 
will  never  be  surrendered.  As  someone  puts  it,  "The  struggle 
now  on  in  the  business  world  is  one  between  equal  opportunity 
and  special  privilege."  The  people  stand  for  equal  opportunity. 
Trusts  and  monopolies  and  their  defenders  stand  for  special  priv- 
ileges to  the  few,  and  unequal  opportunities  to  the  many.  If  a 
free  vote  and  a  fair  count  are  given  the  majority  will  win,  and 
equal  opportunity  for  all  and  special  privileges  to  none  will  exist. 
It  has  been  sought  to  establish  the  fact  that  the  tariff  is  the 
cause  of  the  trust,  and  that  the  removal  of  the  tariff  will  remove 
the  trust.  This  is  not  exactly  correct.  The  tariff  tends  to  make 
more  easy  combinations  to  create  monopolies  in  highly  protected 
articles,  virtually  closing  out  foreign  competition,  by  reason  of 
the  excessive  import  duties  imposed,  thus  leaving  to  a  combine 
of  American  dealers  in  highly  protected  articles  the  sole  control 
of  the  American  market.  The  tariff,  when  sufficiently  high,  sim- 
ply tends  to  remove  foreign  competition.  As  has  been  well  said, 
"The  tariff  is  but  a  wet  nurse  for  certain  kinds  of  trusts  and  mo- 
nopolies"; but  monopolies  and  trusts  to  control  trade  are  of  an- 
cient origin,  those  of  Queen  Elizabeth's  time  being  very  similar 
in  their  character  and  operation  to  our  own  corporation  trusts. 
Queen  Elizabeth's  monopolies  held  crown  patents  or  licenses  to 
control  certain  lines  of  trade.  The  modern  corporation  monop- 
oly holds  charter  contract  of  the  state  creating  it.  The  monop- 
olies created  by  kings  and  queens  were  granted  a  portion  of  the 

in 


royal  right  to  rob  the  public  in  the  guise  of  a  legal  grant.  The 
combined  corporate  trust  of  to-day  has  given  it  by  the  loose  cor- 
poration laws,  a  portion  of  the  sovereignty  of  the  state,  to  enable 
it  to  legally  destroy  competition  and  control  trade.  The  aboli- 
tion of  the  tariff  would  not  affect  a  world-wide  trust,  one  embrac- 
ing all  lands  and  all  nations,  and  with  capital  sufficient  to  con- 
trol the  product  in  any  particular  line  of  business.  I  am  forced 
to  conclude,  therefore,  that  the  only  effect  of  the  tariff  on  the 
trust  question  is  to  make  more  easy  the  formation  of  a  trust  in 
America  on  highly  protected  articles,  because  it  bars  world-wide 
competition,  and  restricts  business  rivalry  to  American  pro- 
ducers. 

Of  course,  as  to  articles  of  commerce  that  are  not  on  the  tariff 
list,  it  could  not  be  pretended  that  the  tariff  affects  a  combination 
or  assists  it.  The  state  can  control  and  restrain  trusts  in  existence, 
but  it  involves  a  constant  legal  battle  to  do  so.  I  do  not  believe 
you  could  induce  men  worth  $1,000,000  or  $2,000,000  to  embark 
in  great  industrial  enterprises  where  the  liabilities  assumed  in 
carrying  on  the  business  would  amount  to  a  hundred  or  more 
million  of  dollars  if  the  failure  of  the  enterprise  would  subject 
their  personal  fortunes  to  liability  for  the  payment  of  debts  in- 
curred in  the  prosecution  of  the  business.  We  all  know  how  care- 
fully the  very  rich  as  a  rule  guard  against  personal  liability.  But 
if  the  trust  organizers  could  only  carry  on  their  business  through 
a  co-partnership,  the  members  of  the  trust  would  have  the  same 
liabilities  and  only  equal  opportunities  with  the  individual  com- 
petitor. Equality  of  opportunity  in  business  instead  of  special 
privilege  would  exist.  The  action  of  the  trust  and  its  extension 
of  business  could  only  be  carried  on  then  by  consent  of  all  the 
members  of  the  trust,  if  it  was  a  co-partnership.  Trusts  either 
buy  a  rival  or  crush  him,  thus  entailing,  in  the  latter  instance, 
great  financial  loss  and  frequently  ruin.  State  statutes  give  a 
right  of  action  for  damages  against  trusts  injuring  competitors 
in  efforts  to  control  markets.  If  the  trust  is  a  corporation  the 
action  can  only  be  against  the  corporate  entity  for  damages ;  while 
if  the  trust  was  a  partnership,  then  the  right  of  action  would  be 
against  not  only  the  partnership,  but  also  against  each  individual 
member  thereof.  That  many  such  suits  would  be  brought  against 
partnerships  and  the  members  thereof  operating  a  trust,  goes 
without  saying,  and  this  fact  would  deter  millionaires  from  be- 
coming members  of  trade  combinations.  Trading  corporations 
place  partnerships  and  individual  merchants  and  business  men 
at  a  disadvantage  in  many  ways.  The  co-partnership  method,  with 
its  liabilities  and  responsibilities,  collectively  and  individually, 

112 


makes  men  cautious,  and  keeps  down  inflation  of  values  and  wild 
speculation.  Mercantile  partnerships  develop  individuality  in- 
tegrity and  character  in  the  commercial  world.  Commercial  or 
trading  corporations  destroy  individuality  in  business  affairs,  and 
by  reason  of  non-liability,  generate  fictitious  values  and  create  a 
false  condition  of  financial  affairs. 

In  the  old  days,  when  great  mercantile  and  manufacturing 
enterprises  were  carried  on  by  partnerships,  a  young  man  was 
taken  in  as  a  clerk,  and  by  industry,  honesty  and  ability,  could 
work  his  way  up  until  gradually,  as  the  heads  of  the  firm  retired, 
the  younger  man  who  had  been  growing  up  with  the  business  was 
taken  into  the  firm  as  a  junior  partner  and  eventually  was  given 
to  him  the  entire  charge  of  the  business.  But  how  is  it  now? 
What  chance  is  there  for  a  young  man,  by  his  individual 
worth,  to  rise  from  a  clerkship  in  one  of  the  great  commercial 
trading  corporations?  If  the  head  of  the  firm  dies,  the  stock  in 
the  firm  simply  passes  to  his  heirs  and  executors,  and  the  business 
is  carried  on  just  as  before,  but  no  head  clerks  are  promoted  by 
reason  of  the  death  of  the  head  of  the  firm.  The  impalpable, 
bloodless,  intangible  corporation  is  not  affected  by  the  physical 
disability  or  death  of  its  shareholders.  The  incentive  for  the 
young  man  to  develop  individuality  and  character  in  mercantile 
life  is  largely  removed.  The  young  man,  under  the  corporate 
regime,  is  simply  a  part  of  a  great  machine,  and  he  is  used  until 
he  is  no  longer  valuable,  and  then  replaced  by  some  one  of  younger 
years.  The  corporation  in  ordinary  business  dwarfs  individuality 
and  creates  inequality  and  lessens  competition.  The  partnership 
in  business  develops  individuality  and  creates  equality  and  com- 
petition. I,  therefore,  am  firmly  of  the  opinion  that  the  state 
should  enact  laws  providing  that  no  corporation  should  be  organ- 
ized for  any  but  public  and  quasi  public  purposes,  and  name  dis- 
tinctly what  shall  be  considered  public  and  quasi  public  purposes. 
Of  course,  in  the  great  commercial  centers,  strong  opposition  will 
exist  to  this.  The  argument  will  be  made  that  corporate  control 
of  business  is  so  absolute  and  easy  that  trading  corporations  are 
a  necessity.  It  is  true  that  the  control  of  a  trading  corporation 
is  easy,  because  it  depends  on  the  mere  matter  of  dollars  to  buy 
a  majority  of  the  stock,  and  not  on  the  will  or  the  brains  of  the 
individual  shareholder.  One  man  may  buy  enough  of  the  shares 
of  stock  to  control  a  corporation,  although  there  may  be  a  hun- 
dred stockholders.  If  the  transition  back  to  co-partnerships  be 
simply  an  inconvenience,  and  business  corporations  be  desirable 
only  for  convenience,  then  let  us  have  at  once  laws  enacted  that 
declare  the  members  of  a  corporation  responsible  to  the  same  ex- 

113 


tent  as  the  members  of  a  co-partnership  for  the  debts,  acts  and 
liabilities  of  a  corporation.  This  will  leave  the  corporation 
existing.  It  will  meet  the  argument  that  corporations  are  so  con- 
venient, because  of  being  so  readily  controlled,  and  that  therefore 
they  are  a  necessity  of  modern  commercial  life.  These  laws  will 
tend  to  equalize  opportunities  in  the  business  world,  and  where 
opportunity  is  equal  the  natural  law  of  supply  and  demand,  guided 
by  the  ever-present  power  of  competition,  will  regulate  in  a 
healthful  and  steady  manner  the  business  interests  of  the  country. 

I  believe  either  of  these  remedies  will  solve  the  trust  question 
by  preventing  to  a  great  extent  the  organization  of  private  trading 
corporations.  Monopolies  and  trusts  can  only  exist  where  con- 
solidation and  combination  are  easy  and  possible.  As  long  as  a 
mere  matter  of  dollars  sufficient  to  purchase  a  majority  of  shares 
of  a  corporation  renders  it  possible  to  form  a  combine,  thus  long 
combines  and  trusts  will  exist.  But  partnerships  are  based  en 
consent  of  the  members,  and  the  purchase  of  the  interests  of  one 
member  of  a  firm,  or  of  all  but  one,  will,  unless  all  consent  to  the 
change,  dissolve  the  co-partnership.  Under  the  corporate  system 
the  investment  of  money  alone  will  create  a  combination  by  the 
purchase  of  the  shares  of  stock  of  the  corporation  desired  to  be 
absorbed,  regardless  of  the  will  of  the  objecting  members.  Under 
the  partnership  system,  mutual  assent  of  all  partners,  those  who 
buy  and  those  who  sell,  as  well  as  all  interested,  must  be  obtained 
before  a  combine  is  possible.  Protection,  equality,  and  justice 
reign  in  business  transactions  under  the  regime  of  partnerships; 
but  under  corporate  control,  inequality,  tyranny,  injustice,  and 
above  all,  the  mere  power  of  the  dollar,  reign  supreme. 

The  mere  caution  of  men  risking  their  all  in  one  business 
venture  will  prevent  the  formation  of  great  trusts  where  indi- 
vidual liability  exists.  If  the  trading  private  corporation  is 
allowed  to  continue  as  it  now  exists,  trusts  will  continue  to  be 
formed,  and  the  protest  of  the  people  over  their  oppressive  opera- 
tion will  take  the  form  of  laws  that  will  necessarily,  under  the 
guise  of  regulating,  at  last  go  to  the  extreme  of  attempting  to  fix 
prices  by  law,  and  when  this  fails,  then  the  natural  recourse  of 
the  people  will  be  the  abolition  of  private  ownership  of  property, 
which  will  usher  in  an  era  of  socialistic  governmental  experi- 
ments, in  the  end  bringing  disaster  U>  our  people  and  republic. 

I  recognize  that  large  masses  of  capital  can  be  had  and  used 
to  best  effect  only  when  capital  is  secure.  Capital  should  be  given 
the  fullest  opportunity  possible  consistent  with  the  public  good, 
but  capital  can  usually  take  care  of  itself.  It  must  be  employed 
or  it  is  useless.  Capital  and  labor  must  use  each  other.  The  trust 

114 


is  a  profitable  field  for  capital,  and  hence  capital  seeks  the  trust. 
The  trust  is  becoming  the  dictator  of  trade.  Its  powers  are  not 
limited  by  charter  or  public  opinion.  It  enters  all  branches  of 
industry.  It  reduces  the  price  of  raw  material  it  buys,  and  raises 
the  price  of  the  product  it  sells.  Its  movements  are  secret,  silent, 
unerring  and  all-powerful.  Its  vast  profits  will  ever  tempt  wealth 
and  enterprise,  and  the  aim  of  capital  to  constantly  seek  profits 
will  be  ever  a  menace  to  the  security  of  the  trust  investor.  The 
struggle  to  obtain  the  special  benefits  for  the  few  by  the  trust 
managers  and  the  battle  for  equal  opportunity  for  all  in  business 
is  the  point  of  interest  the  state  should  bend  its  energies  to  adjust 
at  once,  for  herein  lies  the  danger  to  our  land. 

I  believe,  therefore,  that  the  coming  assembly  of  governors 
and  attorney-generals  of  the  various  states  should  take  steps  look- 
ing to  the  calling  together  of  the  legislatures  of  the  various  states, 
if  necessary,  for  the  purpose  of  enacting  legislation  along  the  lines 
I  have  suggested  herein.  If  practicable,  I  believe  that  these  vari- 
ous states  should  at  once  enact  laws. 

Following  Mr.  Crow's  remarks,  papers  were  presented  by 
P.  E.  Dowe,  president  of  Commercial  Travelers'  National  League, 
New  York;  F.  B.  Thurber,  of  New  York,  president  U.  S.  Export 
Association;  Joseph  Nimmo,  Jr.,  of  Washington,  D.  C.,  president 
National  Society  of  Statisticians,  and  Stephen  P.  Corliss,  repre- 
senting the  traveling  men. 

P.  E.  Dowe  addressed  the  conference  on  the  subject  of  "The 
Trusts  and  the  Commercial  Travelers": 

P.  E.  DOWE. 

President  Commercial  Travelers'  National  League.     Statistician  of  the  American  Anti- 
Trust  League. 

I  have  listened  time  and  again  to  my  fellows,  in  discussion  as 
to  the  definition  of  the  word  "trusts,"  and  there  appears  to  be  a 
varied  opinion  as  to  its  significance.  The  unabridged  Webster's 
dictionary  I  make  use  of  at  my  home  fails  to  define  the  word,  in 
the  sense  of  commercial  combinations,  so  a  short  discussion  of 
the  accepted  meaning  of  the  word  does  not  seem  out  of  place  at 
this  time. 

I  found  the  following  definition  in  Maitland's  Dictionary  of 
English  Slang  and  Americanisms:  "Trust,  a  combination  of 
manufacturers  or  dealers  for  the  purpose  of  limiting  production 
and  advancing  prices,  or  one  of  railroads,  gas  companies  and  other 

115 


corporations  for  their  own  benefit  and  to  the  detriment  of  the 
public.  See  Combine." 

"Combine  (American),  a  word  coined  to  express  the  same 
meaning  as"  'trust'  and  supposed  not  to  be  quite  so  distasteful  to 
the  opponents  of  monopolies/' 

The  following  I  copy  from  the  New  York  Journal  of  Com- 
merce, Commercial  Y ear-Book:  Mr.  Byron  Holt's  definition  of 
the  word  "Trust": 

"As  popularly  used  the  word  'Trust'  is  now  applied  to  any 
consolidation,  combine,  pool,  or  agreement  of  two  or  more  natu- 
rally competing  concerns,  which  establishes  a  partial  or  complete 
monopoly,  in  certain  territory,  with  power  to  fix  prices  or  rates 
in  any  industry.  Viewed  from  the  standpoint  of  the  consumer, 
the  informal  agreement  and  the  iron-clad  combine  look  alike 
if  the  one  has  the  same  effect  as  the  other  upon  prices." 

Trusts  are  organized  for  speculative  reasons,  primarily,  in 
spite  of  the  contentions  of  some  unpractical  writers  upon  social 
and  economic  conditions,  who,  good  souls  they  are,  dwell  upon 
ethics  or  argue  for  the  brotherhood  condition  of  mankind,  in 
anticipation  of  an  approaching  millennium.  - 

If  these  men,  inexperienced  in  the  ways  of  the  world,  could 
be  brought  to  a  realization  of  the  fact  that  their  arguments  are 
misapplied  by  promoters  and  officials  of  the  commercial  conspira- 
cies known  as  trusts,  are  offered  by  Shylocks,  with  knife  and 
scales  clamoring  for  the  pound  of  flesh,  to  excuse  the  attacks  upon 
the  commercial  integrity  and  equality  of  this  country,  and  to 
cover  their  hatred  of  the  citizens  who  seek  by  the  enterprise 
characteristic  of  American  individualism,  to  throw  off  the  galling 
yokes  of  serfdom  to  the  monopolistic  class,  they  would  wish  that 
the  ink  had  dried  upon  their  pens  before  the  production  of  such 
dangerous  weapons  in  the  hands  of  unscrupulous  speculators. 

"While  trusts  are  for  speculative  purposes  principally,  they 
have  other  sinister  designs;  organized  first  for  the  money  in  the 
deals,  secondly  for  a  more  marked  line  of  differentiation  between 
the  few  very  rich  and  the  many  very  poor,  and  thirdly  for  the 
virtual  enslavement  of  labor;  not  for  industrial  economies  and 
to  reduce  the  prices  of  the  commodities  to  the  consumer ;  not  for 
the  good  of.  the  people,  but  against  their  welfare ;  and  all  claims 
by  those  interested  in  trusts  or  by  their  subservient  tools  to  the 
contrary  are  veritable  lies. 

Another  unpractical  class  who  knowingly  or  unwittingly  assist 
in  the  gigantic  swindle  of  the  age,  surrounding  with  alluring  and 
delicately  worded  fallacies,  the  miscalled  scientific  economies; 
clothed,  so  to  speak,  with  the  covering  of  the  gentle  sheep,  but 

116 


containing  the  ravenous  wolf.  I  mean  that  proportion  of  the 
college  professors  who  give  jn  their  lectures  upon  political  econ- 
omy the  kind  of  arguments  they  are  expected  to  propound,  and 
for  which  they  are  paid.  The  sons  of  some  wealthy  fathers  must 
be  educated  to  enable  them  to  take  their  places  as  the  coming 
plutocrats,  and  must  be  taught  the  most  approved  methods  for 
the  subjugation  of  the  common  people.  The  majority  of  these 
sires  sprung  from  lowly  origin,  but  now  aspire  to  an  exclusive  set, 
and  are  more  than  willing  to  enter  into  any  movement,  con- 
spiracy or  otherwise,  to  prevent  other  American  citizens  (neither 
better  nor  worse  off  than  were  once  these  so-called  self-made  men) 
from  attaining,  the  same  degree  of  success — or  a  partial  attain- 
ment. These  men,  most  of  whom  are  composed  of  the  coarser 
kind  of  human  clay,  will  open  their  hearts  and  purses  to  assist 
into  Apolitical  power  the  creatures  who  can  be  molded  as  easily 
as  a  handful  of  putty,  to  the  wishes  of  snobs,  who  aspire  to  be 
of  the  upper  class,  the  codfish  aristocrats,  by  the  grace  of  a  rapid 
accumulation  of  wealth. 

Still  another  class,  that  must  bear  a  share  of  the  responsibility 
for  aiming  to  create  a  misconception  of  the  trust  question,  is  that 
proportion  of  the  newspaper  writers,  managers,  and  proprietors, 
who  have  allowed  themselves  from  political  connections  or  from 
subsidizing  processes  applied  by  the  direct  or  indirect  influence 
of  trust  magnates,  or  for  both  reasons,  to  become  the  catspaws 
of  the  "inflationists  for  revenue  only."  The  press  owes  some 
duty  to  the  public,  to  the  people,  the  plain  people,  who  constitute 
the  bone  and  sinew  of  the  nation.  Upon  the  press  a  great  respon- 
sibility rests.  The  people  desire  from  it  the  truth,  the  whole 
truth,  and  nothing  but  the  truth. 

There  are  many  reliable  news  sheets  and  honest  newspaper 
men,  for  which  thank  God;  but  the  man  who  aims  to  purposely 
deceive  the  readers  of  the  paper  with  which  he  is  connected,  by 
offering  unhealthy  doctrines  and  false  argument,  may  not  receive 
a  just  punishment  for  the  crime  (for  so  it  is  in  a  sense)  while  on 
this  mundane  sphere;  but  when  he  appears  before  the  final  tri- 
bunal will  obtain  the  condemnation  so  richly  deserved  for  betray- 
ing another  kind  of  "trust"  than  those  being  considered  here, 
i.  e.,  the  people's  trust. 

I  have  been  told  by  a  number  of  newspaper  men  that  my 
previous  public  utterances  respecting  trusts  and  their  effects  were 
of  especial  interest,  owing  to  the  incidental  statistics  submitted, 
and  as  I  shall  make  use  of  some  figures  to-day,  it  is  but  fair  that 
an  explanation  be  offered  as  to  where  and  how  they  were  obtained. 
I  first  became  interested  in  the  subject  of  trusts  after  reading  Mr. 

117 


Lloyd's  book,  "Wealth  Against  the  Commonwealth,"  a  few  years 
since,  and  began  immediately  thereafter  the  collection  of  news- 
paper clippings  and  books  bearing  upon  the  subject.  It  was  not 
until  I  had  been  elected  the  president  of  the  Commercial  Trav- 
elers' National  League  in  1897,  however,  that  it  dawned  upon 
my  faculties  that  the  commercial  men  were  to  be  made  the  first 
victims  of  the  situation ;  yet  at  that  time  I  had  but  an  imperfect 
conception  of  the  great  magnitude  of  the  trust  movement,  and 
must  confess  that  it  was  not  until  the  last  half  of  the  year  1898 
that  I  fully  realized  the  danger  and  extent  of  the  centralization 
of  capital,  and  the  monopolizing  of  commodities. 

Beports  began  to  reach  me  of  first-class  salesmen  being  dis- 
pensed with  for  no  reason  other  than  the  fact  that  trusts,  "Con- 
ceived of  greed,  born  of  dishonesty,  and  cradled  in  the  lap  of 
injustice,"  had  assumed  the  octopus  form,  and  taken  within  far- 
reaching  tentacles,  all  or  nearly  all  the  concerns  in  specific  lines 
of  trade,  and  were  sucking  the  life  from  fair  and  honest  competi- 
tion. Trust  manipulation  for  the  purpose  of  controlling  a  par- 
ticular line,  and  fixing  the  prices  and  quality  of  its  commodities, 
meant  that  the  traveling  salesmen  must  go,  aye  "go" — anywhere, 
to  Heaven  or  the  other  place,  for  aught  the  trust  magnates  care. 

Entering  upon  a  systematic  research  and  a  close  study  of  the 
situation,  during  which  time  I  heard  from  more  than  six 
thousand  commercial  travelers,  either  in  writing  or  verbally,  or 
through  reports  of  friends  who  were  assisting  in  the  work,  I  was 
enabled  to  submit  in  evidence  before  the  industrial  commission 
in  "Washington  in  June  last,  "important  data  as  to  the  number  of 
traveling  salesmen  dispensed  with  directly  or  indirectly  through 
the  organization  of  trusts,  and  to-day  I  have  no  reason  for  chang- 
ing my  figures.  I  also  stated  the  number  of  salesmen  reduced 
in  salary,  from  the  effect  of  trusts;  and  gave  figures  furnished 
me  by  traveling  men,  either  formerly,  or  at  the  time  of  giving 
information,  employed  in  the  lines  of  their  greatest  experience, 
as  to  the  advances  in  the  prices  of  trust  commodities.  I  have  with 
me  a  few  copies  of  my  testimony  before  the  industrial  commission 
and  having  new  material  to  offer  to-day,  will  not  rehash  that 
evidence,  but  will  be  glad  to  furnish  the  pamphlets  containing 
the  old  material  to  the  delegates  to  the  Civic  Federation  desiring 
a  copy. 

There  have  been  thirty-five  thousand  commercial  travelers 
thrown  out  of  employment;  mostly  traveling  salesmen,  but  in 
part  city  salesmen  who  come  under  the  title  of  commercial  trav- 
elers ;  for  the  man  who  picks  up  his  gripsack  and  drums  city  trade, 
or  invites  customers  to  his  headquarters  to  inspect  his  samples, 

118 


is  a  commercial  salesman,  or  a  commercial  traveler,  by  a  slight 
elasticity  in  the  use  of  the  name.  A  city  salesman  is  eligible  to 
membership  in  any  of  the  commercial  travelers'  associations. 
The  majority  of  city  commercial  salesmen  make  out-of-town  trips 
occasionally,  sometimes  short  distance,  sometimes  long  distance 
journeys.  I  neglected  to  note  in  previous  arguments  this  sub- 
classification  ;  it  is  unimportant,  however,  as  the  city  men  are  but 
a  small  proportion  of  the  whole  number  affected. 

I  stated  in  Washington  in  June  last  that  twentv-five  thousand 
were  reduced  in  salaries.  Could  add  to-day  a  thousand  to  these 
figures.  I  was  in  error  when  I  anticipated,  on  the  16th  of  June, 
that  thousands  more  of  the  commercial  travelers  would  be  dis- 
pensed with  on  July  1st;  for,  from  reasons  best  known  to  the 
trust  officials,  expected  wholesale  discharges  did  not  take  place. 
I  have  heard  from  less  than  one  hundred  discharged  on,  that  date, 
but  have  been  notified  of  many  cases  of  reduced  salary.  Eeduc- 
tion  in  salaries  was  not  exclusively  with  trusts ;  many  of  the  "out- 
siders/" owing  to  the  pressure  of  unfair  competition  and  loss  of 
trade,  were  obliged  to  make  reductions. 

The  salesmen  who  lost  positions,  owing  to  the  trusts,  were 
all  good  men;  being  of  energetic  and  progressive  character,  pro- 
verbial of  the  American,  could  not  be  discovered  as  tramping  the 
streets  wearing  signs  of  distress.  Nearly  every  one  of  them  had 
some  money  saved;  some  found  positions  as  travelers  for  other 
houses;  some  went  into  other  pursuits;  some  had  farms,  and  I 
know  of  more  than  forty  instances  where  former  drummers  are 
doing  farm  work;  and  some  are  still  looking  for  positions. 

Commercial  travelers  are  opposed  to  trusts,  both  from  policy 
and  principle,  and  consider  them  detrimental  and  demoralizing — 
detrimental  as  menacing  the  possession  and  enjoyment  by  the 
people  of  those  rights  to  life,  liberty,  and  the  pursuit  of  happi- 
ness, and  equal  privileges  and  possibilities  in  the  application  of 
individual  enterprise  and  experience;  demoralizing  as  presenting 
un-American  conditions;  imitation  of  English  business  methods, 
as  offering  evidences  of  rascality  and  corruption.  In  this  con- 
nection I  will  assert  that  if  the  statements  in  Lloyd's  "Wealth 
Against  the  Commonwealth"  will  cause  the  blood  of  honest  men 
to  boil  within  their  veins  with  indignation  that  such  conditions 
could  exist  in  this  so-called  free  and  enlightened  republic,  with  a 
full  appreciation  by  the  people  of  the  rottenness  of  the  latter-day 
growth  of  trusts,  a  thousand  times  more  corrupt  and  grasping 
than  the  regime  of  which  Mr.  Lloyd  writes,  they  would  sweep 
from  political  life  the  subservient  tools  of  the  trust  power.  The 
people  ask  to  be  shown  the  way  to  peacefully  crush  the  growing 

119 


monopolistic  power  or  to  cut  its  claws ;  and  they  will  surely  apply 
the  one  moving  force  greater  than  the  power  of  money — the  bal- 
lot— in  a  "landslide"  for  the  candidates  in  whom  they  have  confi- 
dence. 

Improvement,  progression,  inventive  genius,  single  enterprise,. 
American  manhood  and  vim  are  conspired  against  by  the  trust 
magnates. 

I  had  prepared  another  paper  to  present  to-day,  but  upon 
receipt  of  the  question  blanks  issued  by  the  Civic  Federation  to 
the  secretaries  of  commercial  travelers'  organizations,  labor 
bodies,  trusts,  wholesale  merchants,  and  others,  I  decided  to  sub- 
stitute this  paper. 

There  are  thirty-two  leading  associations  for  commercial  trav- 
elers in  the  United  States,  two  of  which  have  local  posts,  about 
two  hundred  and  fifty  all  told;  there  are  also  a  few  commercial 
men's  social  clubs,  scattered  throughout  the  country;  in  even 
numbers  three  hundred  and  twenty-five  associations,  great  and 
small,  of  commercial  travelers. 

I  could  have  written  the  secretaries  of  these  three  hundred 
and  twenty-five  associations  at  a  great  saving  of  expense  in  the 
investigation  of  the  subject  of  "Trusts  and  Their  Effects  Upon 
Commercial  Travelers";  the  secretary  of  each  organization  could 
have  given  me  some  personal  information,  and  acquainted  me 
with  some  points  obtained  from  friends,  but  unless  he  had  com- 
municated with  the  members  of  his  association,  his  replies  to  a 
series  of  relevant  questions  would  of  necessity  be  more  or  less- 
guesswork. 

At  my  suggestion  the  American  Anti-Trust  League  has  begun 
a  work  of  statistical  investigation;  they  propose  to  show  by 
authentic  data  that  while  the  cost  of  living  has  increased  within 
the  last  two  years  at  an  average  of  between  12  and  16  per  cent, 
wages  have  been  advanced  less  than  3  per  cent;  and  that  wages 
are  lower  to-day  than  in  1895.  The  statements  regarding  wages 
are  upon  information  supplied  by  some  well-known  officials  of 
labor  organizations,  who  are  thoroughly  posted  about  the  union 
scale. 

The  American  Anti-Trust  League  will  publish  some  new  fig- 
ures regarding  trade  balances,  and  comparisons  of  previous  years, 
showing  the  proportion  of  export  and  domestic  business,  and 
demonstrating  the  effect  the  trust  prices  have  had  in  swelling 
the  figures. 

I  have  here  a  list  showing  advances  in  the  prices,  due  to  the 
direct  or  indirect  influence  of  trusts,  of  about  150  commodities; 
the  advances  ranging  from  5  to  500  per  cent.  The  list  was 

120 


obtained  by  representatives  of  the  Anti-Trust  League  applying 
to  manufacturers  and  dealers  for  information,  and  making  daily 
reports.  Nearly  500  establishments  were  visited.  The  list  is 
sworn  to.  (See  appendix.) 

As  I  have  been  limited  to  a  twenty  minutes'  discussion,  I  can- 
not run  over  the  list,  but  have  had  it  printed  in  sufficient  quan- 
tity to  supply  one  copy  for  each  of  the  gentlemen  of  this  confer- 
ence. Will  call  attention  to  a  few  items:  Ordinary  shovels 
doubled  in  wholesale  price,  and  snow  shovels  advanced  145  per 
cent;  iron,  85  to  130  per  cent;  coal,  50  cents  a  ton  wholesale;  gas- 
oline, 4  cents  a  gallon;  shoes  for  the  workingmen,  15  to  50  cents 
per  pair,  etc. 

I  submit  the  following  letter: 

"Lansing,  Mich.,  July  8,  1899. 

"P.  E.  Dowe,  Esq.,  President  Commercial  Travelers'  National 
League,  New  York. 

"Dear  Sir:  In  reply  to  yours  of  the  5th,  will  say,  that  a 
detailed  report  of  the  investigation  of  hotels  will  not  be  published 
for  some  time. 

"The  facts  are,  however,  that  over  90  per  cent  of  100  hotels 
interviewed  claim  a  falling  off  of  traveling  men  of  10  to  50  per 
cent  during  the  past  year,  which  in  most  instances  they  attribute 
to  the  effects  of  trusts  and  combinations. 

"The  reports  otherwise  show  their  business  to  be  on  the  in- 
crease, and  satisfactory,  only  complaining  of  the  falling  off  of 
commercial  men,  which  in  most  instances  is  made  up  by  an 
increase  of  tourists  and  the  traveling  public. 

"Yours  most  respectfully, 
"(Signed.)  J.  L.  Cox, 

"Commissioner  of  Labor." 

The  amount  of  the  common  and  preferred  stocks,  of  all  the 
listed  trusts  and  inclusive  of  their  bonded  indebtedness,  is  the 
vast  total  of  $8,000,000,000  in  round  figures.  This  statement  is 
made  upon  most  reliable  authorities. 

Upon  information  furnished  by  a  well-known  newspaper  sta- 
tistician, have  stated  upon  previous  occasions  that  the  intrinsic 
valuation  in  the  aggregate  of  all  the  trusts  is  about  $2,000,000,- 
000,  a  four-to-one  ratio  for  stock-jobbing  manipulation;  but,  now 
think  that  this  is  an  overestimate. 

Previous  to  1895  nearly  600  trusts  were  projected,  and  to 
include  a  great  variety  of  commodities;  several  of  these  trade 
combinations  failed  to  materialize,  some  disintegrated;  but  the 
processes  for  the  centralization  of  capital  and  power  continued, 

121 


combination  and  recombination  going  on  until  in  March  last 
there  were  between  350  and  360  combines,  yet  their  capitaliza- 
tion was  billions  more  than  the  capitalization  of  the  600  trusts 
of  1894  and  before.  To-day  my  list  shows  425  trusts. 

The  number  of  business  concerns  absorbed  by  the  gradual  and 
systematic  efforts  to  obtain  control  of  the  markets  and  highways ; 
5,565,  say  5,600  in  round  numbers;  exclusive  of  the  grape  grow- 
ers, lake  vessels  and  dredges,  milk  dealers,  and  farmers'  milk  com- 
bines; also  insurance,  telephone  and  telegraph,  railroads  and 
street  railways,  electric  light,  gas,  ice,  water  and  steamship  trusts. 

I  have  no  means  at  my  command  of  ascertaining  with  cer- 
tainty the  amount  of  capital  of  each  concern  absorbed  in  the 
processes  of  combination  and  recombination.  Dun's  and  Brad- 
street's  Commercial  Agencies  could  secure  this  information  by 
setting  investigating  forces  at  work.  I  will  Lssume,  for  argument, 
that  the  capital  will  average  for  each  concern  not  more  than 
$200,000,  or  for  5,565  concerns,  $1,113,000,000,  about  an  eight- 
to-one  ratio  of  valuation  for  speculative  purposes. 

The  letter  from  Mr.  Cox  suggested  the  idea  of  similar  lines  of 
investigation  in  other  states,  and  I  communicated  with  several 
hundred  hotels  scattered  over  the  country.  The  replies  demon- 
strated a  falling  off  of  commercial  trade,  of  an  average  of  18  per 
cent;  and  this  did  not  tally  with  my  figures;  showing  either  an 
underestimate  of  the  number  of  traveling  salesmen  affected  by 
the  trusts,  or  the  accepted  figures  as  to  the  total  number  of  com- 
mercial travelers  to  be  an  over-approximation;  I  requested  the 
Anti-Trust  League  to  seek  information  from  every  hotel  in  the 
United  States,  to  which  they  agreed. 

I  have  received  the  statement  of  the  printer  that  communica- 
tions were  addressed  to  5,000  hotels  last  /week;  more  will  go  out 
this  week. 

What  if  the  trusts  win?  "The  whole  machinery  of  inde- 
pendence, as  we  have  known  it  heretofore  in  this  country,  is 
entirely  gone,  and  man,  whatever  his  prospects  might  have  been, 
is  absolutely  at  the  mercy  of  the  trust.  It  must  feed  him,  clothe, 
him,  shelter  him,  and  educate  him,  as  will  serve  its  interests." 
The  foregoing  is  quoted  from  a  letter  of  an  attorney-general. 

I  will  now  read  a  letter  from  a  United  States  senator,  one  of 
the  brilliant  men  of  the  day,  and  noted  the  world  over  for  his 
sterling  honesty  and  utter  fearlessness: 

"My  Dear  Mr.  Dowe :  The  cause  at  stake — the  restriction  of 
trust  combinations — I  have  very  much  at  heart.  We  ought  to 
urge  it  calmly  and  reasonably. 

12-2 


"Extreme  demands  and  vituperate  advocacy  are  what  the 
monopolists  desire  to  have  us  resort  to.  There  is  no  need  of  this. 
We  may  freely  admit  the  benefits  from  large  capital  and  extensive 
plants  engaged  in  productive  industries;  and  we  do  not  object  to 
them  up  to  a  reasonable  point. 

"But  we  are  sure  that  beyond  such  a  point,  when  combinations 
become  so  large  that  competition  ceases,  low  prices  to  the  con- 
sumer also  end;  economies  are  no  longer  practiced;  it  is  easier 
to  pay  huge  salaries  and  raise  the  prices  of  the  product  than  it 
is  to  adopt  economies  and  reduce  prices;  and  so  up  go  the  prices, 
and  the  people  suffer.  Individual  enterprise  is  destroyed;  energy 
and  ambition  on  the  part  of  the  'firms  of  small  means,'  as  Mr. 
Depew  describes  them,  die  out;  the  struggling  young  men  of 
small  capital  become  merely  the  low-salaried  employees  of  mil- 
lionaires; and  the  nation  becomes  divided  into  two  classes  only, 
the  few  very  rich  and  the  many  very  poor.  It  will  be  a  great 
misfortune  to  our  free  America  if  our  present  high  rising  pros- 
perity is  to  be  signalized  by  the  inauguration  of  a  system  of  great 
trusts  in  all  production  and  the  helpless  subjugation  of  all  the 
business  men,  the  manufacturers  and  other  producers,  and  the 
wage-earners,  by  the  rich  capitalists  and  speculators  who  organize 
and  control  the  trusts. 

"If  the  people  are  sufficiently  determine  d,  the  march  of  trust 
organization  can  be  arrested  at  a  safe  stage.  By  state  and  na- 
tional legislation  all  evils  can  be  prevented.  I  have  not  had  time 
to  examine  the  Texas  anti-trust  law  as  expounded  iii  the  North 
American  Review  by  Governor  Sayers,  who  is  one  of  the  ablest, 
most  upright,  and  most  courageous  of  our  public  men  of  to-day; 
but  I  am  sure  that  suitable  laws  to  be  passed  by  the  state  legisla- 
tures and  by  Congress  can  be  framed.  Such  laws  are  what  we 
want,  not  mere  resolutions  of  political  conventions,  to  be  aban- 
doned and  the  cause  destroyed  by  unfaithful  legislators.  Elect 
true  men,  and  the  work  is  done.  Unfortunately,  the  selection 
and  election  of  such  men  are  difficult  labors.  The  worst  feature 
of  the  trust  organizations  is  their  interference  with  political  gov- 
ernment. Their  managers  care  not  for  the  declaratory  resolu- 
tions if  they  can  select  the  candidates  for  office.  So  they  appear 
everywhere  in  politics.  No  young  man  can  rise  in  his  political 
party,  become  a  local  party  leader,  or  aspire  to  public  office  until 
he  has  given  the  trusts  to  understand  that  he  will  not  seriously 
exert  himself  to  harm  them. 

"The  resolutions  of  political  conventions,  therefore,  should 
not  be  the  whole  subject  of  your  efforts  to  limit  trusts.  The  reso- 


123 


lutions  you  will  easily  secure.    It  is  the  members  of  the  legisla- 
ture and  the  Congressional  nominees  you  need  to  look  after. 
"(Signed.)  Win.  E.  Chandler." 

The  remedy  for  the  plague  of  trusts,  now  epidemic,  I  have 
not  discussed,  excepting  as  contained  in  the  suggestions  of  Sen- 
ator Chandler;  the  purpose  of  my  paper  being  to  demonstrate 
that  trusts  are  considered  as  an  abominable  curse  by  the  people. 
I  speak  for  the  commercial  travelers  especially,  but  for  the  people 
generally  in  opposition  to  trade  combines;  for  the  commercial 
men  have  felt  the  pulse  of  the  people,  as  could  no  other  class. 

Eemedy  for  the  evil  is  expected  by  the  people  from  national 
and  state  lawmakers;  discussion  as  to  the  best  medicine,  so  to 
speak,  is  left  to  others,  better  qualified  from  professional  training, 
to  prescribe. 

As  plain,  every-day  business  men,  the  commercial  travelers 
submit  the  facts  as  they  find  them;  and  that  class  specifically  I 
have  the  honor  to  serve  as  a  spokesman  here. 

Mr.  F.  B.  Thurber  addressed  the  conference  on  the  subject  of 
"The  Right  to  "Combine": 

F.  B.  THURBER. 

President  United  States  Export  Association. 

If  this  conference  does  nothing  else  than  what  it  has  done 
in  giving  wide  publicity  to  the  brief  utterances  of  two  representa- 
tive men,  in  their  letters  acknowledging  the  invitation  to  this  con- 
ference, it  has  justified  its  being  held. 

The  Rev.  Lyman  Abbott,  of  New  York,  said :  "I  think  what 
we  most  need  on  the  subject  of  industrial,  commercial  labor  and 
transportation  combinations  is  just  what  your  letter  indicates 
this  meeting  will  endeavor  to  secure — light,  not  heat.  What  we 
need  to  understand,  and  what  only  experience  can  teach  us,  is 
the  relation  between  competition  and  combination — the  one  the 
centrifugal,  the  other  the  centripetal  force  of  society.  He  who 
believes  only  in  combination  will  logically  be  led  to  socialism; 
he  who  believes  only  in  competition  will  logically  be  led  to  nihil- 
ism. Neither  of  these  results  can  possibly  furnish  the  solution 
of  the  problems  which  now  confront  us.  We  must  learn  how  to 
secure  the  advantages  of  combination  without  destroying  the 
individual;  to  maintain  brotherhood  in  practical  forms  without 
sinking,  obscuring  or  belittling  personality." 

Henry  White,  of  the  United  Garment  Workers  of  America, 

124 


said:  "Your  conference  is  called  at  an  opportune  time.  The 
reorganization  of  industry,  which  is  so  rapidly  taking  place  in 
many  of  the  important  industrial  pursuits,  presents  a  problem 
which  cannot  be  given  too  much  attention  by  the  friends  of  indus- 
trial reform.  It  is  of  more  consequence  just  now  to  understand 
the  nature  of  this  development  than  to  declaim  against  it.  That 
is  the  reason  why  I  sympathize  so  strongly  with  the  calling  of 
this  conference." 

The  right  to  combine  has  been  recognized  from  time  imme- 
morial,, subject  to  a  due  regard  to  the  rights  of  others.  The 
progress  of  the  world  has  for  centuries  been  largely  promoted  by 
combinations  of  labor,  skill  and  capital,  but  it  remained  for  the 
nineteenth  century  under  the  influence  of  steam,  electricity  and 
machinery  to  become,  par  excellence,  the  era  of  combinations. 
These  forces  could  only  be  utilized  to  their  fullest  extent  through 
combining  the  capital  of  individuals,  and  the  advantages  of  such 
combinations  are  so  numerous  that  they  have  revolutionized  the 
industrial,  commercial  and  political  worlds.  Bovee  said:  "In 
former  times,  war  was  a  business,  but  in  modern  times  business 
is  war."  It  is  certain  that  these  forces  enormously  enhanced  the 
force  or  war  of  competition,  and  this  in  turn  has  led  to  attempts 
through  further  combinations  to  regulate  and  control  competi- 
tion. The  editor  of  U.  8.  Consular  Reports  for  August,  1897,  in 
discussing  industrial  centralization  in  Europe,  said: 

"Our  period  is  distinguished  by  its  tendency  to  centralization, 
not  only  in  the  state,  but  likewise  in  industry  and  commerce. 
Large  firms  are  competing  with  small  shops  to  such  an  extent 
that  the  latter  are  disappearing  one  after  another.  The  factory 
has  displaced  the  workshops.  Everything  is  being  done  on  a 
large  scale;  everything  is  becoming  colossal. 

"That  is  not  all.  We  see  now  even  the  great  factories,  not 
finding  themselves  sufficiently  strong  alone,  and  fearing  their 
reciprocal  competition,  renouncing  their  own  autonomy  and  com- 
bining among  themselves ;  and  this  tendency  is  everywhere  mani- 
fest. The  French  charge  d'affaires  at  Berlin  calls  attention  to 
this  centralization  in  Germany;  the  French  consul  at  Glasgow 
mentions  the  same  phenomenon  at  Glasgow. 

"These  facts  are  significant.  They  certainly  indicate  one  of 
the  tendencies — perhaps,  it  might  be  said,  one  of  the  necessities — 
of  our  epoch.  It  is  certain  that  production  is  passing  through  a 
serious  crisis.  Competition  has  occasioned  a  considerable  decline 
in  prices,  and  in  order  to  retain  markets,  certain  industries  have 
been  obliged  to  work  under  unprofitable  conditions.  To  avoid 
final  ruin,  they  have  agreed  either  to  limit  the  production  to 

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maintain  prices,  or  to  conclude  complete  consolidation.  Hence 
the  cartels,  the  syndicates  for  production,  the  associations. 

"We  neither  approve  nor  blame  this  new  procedure ;  we  simply 
record  it,  remarking  that  sometimes  certain  laws  are  developed, 
whatever  may  be  their  consequences." 

The  economic  results  have  been  so  sudden  and  startling  that 
it  has  occasioned  alarm  in  the  public  mind,  and  this  has  been 
seized  upon  by  sensational  journals  and  political  parties  compet- 
ing for  public  favor,  to  unduly  exaggerate  the  evils  attending 
the  evolution,  while  the  good  has  been  overlooked.  The  best 
horse  will  shy  at  an  umbrella  if  it  is  opened  in  his  face  too  sud- 
denly, but  if  allowed  to  smell  of  it  and  see  that  it  is  not  dan- 
gerous, his  alarm  subsides;  and  I  prophesy  that  when  all  sides 
of  this  question  have  been  carefully  studied,  popular  alarm  at  the 
organization  of  industry,  commonly  known  under  the  misnomer 
of  "trusts"  will  subside,  but  in  a  country  with  universal  suffrage 
the  only  way  to  put  down  error  is  to  argue  it  down.  Sensational 
misrepresentations  must  be  met  with  facts  or  grave  injuries  to  our 
industries  and  institutions  will  result. 

The  state  of  alarm  in  the  public  mind  is  indicated  by  the  fol- 
lowing resolutions  recently  adopted  by  the  Wholesale  Grocers' 
Association  of  New  Orleans  regarding  "Trusts" : 

"Whereas,  it  is  the  sense  of  this  association  that  trusts  and 
combinations  controlling  the  output  and  prices  on  commodities 
are  a  menace  to  our  national  safety  and  existence.  We  assert 
as  a  fact  that  it  is  the  intention  and  purpose  of  such  combinations 
and  aggregations  of  capital  under  the  name  of  trusts,  by  capital 
and  concentration  to  control  and  manipulate  alike  the  values 
of  raw  material  and  manufactured  products,  thereby  enabling 
themselves  to  dictate  to  the  producer,  the  wholesale  and  retail 
dealers  as  well  as  the  consumer,  the  prices  they  shall  pay  for  all 
manufactured  commodities.  We  further  assert  that  the  unop- 
posed continuance  and  enlargement  of  trusts  in  our  midst  means, 
as  certainly  as  any  mathematical  fact,  the  absolute  destruction 
of  our  commercial  existence.  Be  it  therefore 

"Eesolved,  By  the  Wholesale  Grocers'  Association  of  New 
Orleans,  that  viewed  from  a  political  standpoint,  we  believe  it  is 
to  the  best  interests  of  all  true  American  citizens  to  use  every 
endeavor  to  cause  the  most  extreme  legislation  against  the  opera- 
tion of  trusts  that  can  be  had  consistent  with  our  state  and  na- 
tional constitutions." 

And  further  illustrations  are  found  in  the  action  of  our  nation- 
al and  state  legislatures  in  enacting  special  statutes  to  limit  this 
supposed  evil.  Congress  prohibited  pooling  agreements  between 

126 


railroads,  and  passed  the  Sherman  anti-trust  law,  which  declares 
every  contract  in  restraint  of  trade  illegal,  and  under  this  act 
the  Supreme  Court  of  the  United  States  in  the  Trans-Missouri 
Freight  Association  case  took  the  extreme  view  (by  the  narrow 
majority  of  five  to  four  judges,  however)  that  even  a  necessary 
agreement  between  carriers  for  establishing  and  maintaining  rea- 
sonable and  uniform  rates  of  freight  was  a  contract  in  restraint 
of  trade.  The  legislature  of  the  great  commercial  state  of  New 
York  in  1896  enacted  a  law  which  provides: 

"No  stock  corporation  shall  combine  with  any  other  corpora- 
tion or  person  for  the  creation  of  a  monopoly  or  the  unlawful 
restraint  of  trade  or  the  prevention  of  competition  in  any  neces- 
sary of  life.  No  foreign  stock  corporation  formed  by  the  consoli- 
dation of  two  or  more  corporations  or  by  the  combination  of  the 
business  of  two  or  more  persons,  firms  or  corporations  for  the 
purpose  of  restricting  or  preventing  competition  in  the  supply 
or  price  of  any  article  or  commodity  of  common  use,  or  for  the 
purpose  of  establishing,  regulating,  or  controlling  the  supply  or 
price  thereof  shall  be  authorized  to  do  business  in  this  state." 

This  law  was  the  outcome  of  an  investigation  by  the  judiciary 
committee  of  the  New  York  senate,  which  was  remarkable  for 
the  bias  shown  against  incorporated  capital  and  the  disregard  of 
economic  facts  developed  by  the  evidence.  The  report,  among 
other  things,  denied  the  right  of  a  manufacturing  corporation 
to  choose  agents  for  the  sale  of  its  goods  and  fix  the  prices  and 
terms  upon  which  they  should  be  sold. 

From  time  immemorial  it  has  been  a  common  custom  in  trade 
for  manufacturers  to  select  agents  to  sell  their  goods  and  to  fix 
the  price  and  terms  on  which  they  shall  be  sold;  also  for  agents 
to  agree  that  in  consideration  of  these  and  a  certain  commission 
or  rebate  they  will  only  sell  the  goods  of  one  manufacturer. 

The  legislature  of  the  state  of  Texas  at  its  last  session  enacted 
an  anti-trust  law  which  prohibits  any  person,  partnership,  firm, 
or  incorporated  body  from  entering  into  any  agreement  to  regu- 
late or  fix  the  price  of  any  article  or  thing  whatsoever,  or  the 
premium  to  be  paid  for  insuring  property,  or  to  fix  or  limit  the 
amount  or  quality  of  any  commodity.  The  act  pronounces  the 
refusal  or  failure  to  put  on  the  market  for  sale  by  any  corpora- 
tion, firm  or  individual  the  product  of  any  party  a  conspiracy 
to  defraud,  so  as  the  refusal  of  any  corporation,  copartnership, 
firm,  individual  or  association  which  may  gather  items  of  news 
or  press  dispatches  for  sale  to  newspapers  to  sell  the  same  to  more 
than  one  newspaper  within  a  certain  radius  of  territory.  This 
act  prohibits  any  person  from  selling  at  less  than  the  cost  of 

127 


manufacture,  or  giving  away  manufactured  products  for  the  pur- 
pose of  driving  out  competition.  The  act  provides  that  if  two 
or  more  persons  or  corporations  who  are  engaged  in  buying  or 
selling  any  article  of  commerce,  manufacture,  merchandise, 
mechanism,  commodity,  or  any  article  or  thing  whatever  sha1! 
enter  into  any  pool,  trust,  agreement,  combination,  confedera- 
tion, association  or  understanding  to  control  or  limit  trade  in  any 
such  article  or  thing  or  to  limit  competition  in  such  trade  by 
refusing  to  buy  from  or  sell  to  any  other  person  or  corporation 
any  such  article  or  thing  for  the  reason  that  such  other  person 
or  corporation  is  not  a  member  of  or  a  party  to  such  pool,  trust, 
agreement,  combination,  confederation,  association  or  under- 
standing, or  shall  boycott  or  threaten  any  person  or  corporation 
for  buying  from  or  selling  to  any  other  person  or  corporation  who 
is  not  a  member  of  or  party  to  such  agreement  shall  be  deemed 
guilty  of  committing  a  violation  of  the  act  and  of  a  conspiracy 
to  defraud,  the  penalty  for  which  is  a  forfeiture  by  the  offender 
of  not  less  than  $200  or  more  than  $5,000  for  every  offense,  and 
each  day  of  such  violation  is  made  a  separate  offense. 

The  governor  of  Texas,  Hon.  Jos.  D.  Sayers,  in  commenting 
upon  this  law  recently  said: 

"It  has  been  asserted  by  some,  who  claim  themselves  qualified 
to  speak  upon  the  subject,  that  trusts,  as  operated  in  the  United 
States,  are  not  harmful,  and  that  they  are  but  the  outgrowth  of 
an  evolution  in  industrial  life  that  is  natural,  healthful  and  neces- 
sary. On  the  other  hand  it  is  insisted,  and  I  think  rightfully, 
that  they  are,  in  a  great  measure,  if  not  entirely,  due  to  vicious  • 
legislation,  to  the  policy  of  the  Federal  Government  in  the  mat- 
ter of  currency  and  taxation,  and  to  that  of  the  states  in  the  cre- 
ation of  corporations.  A  high  protective  tariff,  which  excludes 
foreign  competition,  and  a  single  gold  standard  which  limits  the 
volume  of  currency  and  enhances  the  value  of  that  in  circulation, 
supplemented  by  the  easy  formation  of  corporations  under  state 
authority,  are  the  potent  instrumentalities  upon  which  the  trust 
depends  for  its  existence.  If,  under  the  trust-reign,  the  indus- 
tries of  the  country  be  passing  into  the  hands  of  the  few,  if  the 
products  of  other  lands  be  so  heavily  taxed  as  to  be,  in  a  great 
measure,  denied  entrance  into  our  ports,  and  our  people  be  there- 
by compelled  to  buy  and  use  only  those  manufactured  at  home, 
if  the  cost  of  production  and  distribution  is  being  reduced  to  the 
minimum,  if  the  output  is  being  so  regulated  as  not  to  exceed 
a  given  quantity,  and  its  selling  price  determined  by  the  trust 
exclusively,  if  the  small  dealers  are  being  put  under  duress  as  to 
those  from  whom  and  as  to  what  they  may  buy,  and  as  to  how 

128 


they  may  sell,  if  individual  effort  be  no  longer  able  to  compete 
successfully  with  corporate  power  and  corporate  advantage,  if 
young  and  weak  industries  are  being  strangled  to  death  and  the 
establishment  of  new  and  independent  enterprises  prevented,  it 
cannot  be  doubted  that  for  this  untoward  and  unhealthy  condi- 
tion of  industrial  and  commercial  life  legislation  is,  in  a  large 
degree,  responsible.  If  the  trusts  shall  be  permitted  to  organize 
and  to  operate  as  for  the  last  several  years,  the  result  is  certain 
that  a  more  disastrous  panic  than  has  ever  been  known  will  sooner 
or  later  occur.  Much  of  the  stock  issued  by  these  organizations 
is  entirely  fictitious,  and  does  not  represent  real  capital.  Money- 
lenders will  some  day  refuse  to  recognize  it  as  safe  security,  and 
then  the  storm  will  burst  forth  in  all  its  fury.  Under  such  cir- 
cumstances, what  is  the  duty  of  the  government?  To  it  do  trusts 
and  corporations,  either  directly  or  indirectly,  owe  their  being, 
and  upon  it  therefore  rests  the  obligation  to  see  to  it  that  they, 
its  creatures,  shall  not  harm  the  people. 

"It  is  reported  that  the  attorney-general  of  the  United  States 
has  said  that  the  Federal  Government  is  helpless  to  wage  a  suc- 
cessful warfare  against  the  gigantic  evils  which  proceed  from  the 
trust-power,  and  that  relief  can  only  be  had  through  the  state 
governments.  Congress  can,  if  it  but  will,  render  the  most 
effective  and  substantial  assistance.  Let  it  reverse  the  present 
policy  as  to  the  currency  and  the  tariff,  putting  the  two  metals 
upon  entire  equality,  and  providing  for  a  fairer  and  more 
general  distribution  of  the  currency,  and  lowering  the  duties  on 
imports  so  that  the  productions  of  other  countries  may  compete 
with  those  controlled  by  the  trusts.  This  much  Congress  can  and 
should  do.  In  the  meantime  let  the  states  perform  their  duty. 

"I  have  lately  assumed  to  suggest  a  conference  of  the  gov- 
ernors and  attorney-generals  of  all  the  states  and  territories,  with- 
out exception,  to  consider  the  subject,  and,  if  possible,  to  devise 
and  unite  upon  such  legislation  as  would  overthrow  the  trust- 
power  and  prevent  its  revival.  In  this  matter,  I  have  acted  upon 
my  own  responsibility,  and  with  the  sole  view  to  correct,  if  pos- 
sible, a  great  and  growing  evil — one  that  threatens  much  harm 
to  the  country.  I  have  had,  and  I  will  have,  no  purpose  in  view 
other  than  that  distinctly  specified,  and  I  trust  that,  should  the 
conference  be  held,  no  other  question  will  be  considered  except 
that  of  trusts,  and  the  best  method  to  be  adopted  by  the  states  to 
insure  their  complete  destruction  within  the  shortest  period  pos- 
sible. 

"The  trust  should  be  regarded  as  a  public  enemy  and  should 


129 


be  treated  as  such.  Arrogant,  unscrupulous  and  merciless  in  the 
exercise  of  its  power,  it  should  be  fought  unto  the  very  death." 

These  quotations  illustrate  the  state  of  mind  that' a  consid- 
erable body  of  well-meaning  citizens  is  in  at  the  present  time, 
and  although  such  utterances  appear  somewhat  hysterical  to  the 
student  of  this  question  and  opposed  to  the  facts,  it  is  both  a 
condition  and  a  theory  which  should  meet  careful  consideration 
by  thoughtful  mens  The  "ifs"  mentioned  by  the  governor  of 
Texas  are  assumed  to  be  facts,  but  they  do  not  exist. 

I  have  been  a  careful  student  of  these  organizations  of  indus- 
try from  the  beginning.  I  may  say  that  when  I  began  it  was 
with  a  strong  prejudice  against  them.  I  believed  that  they  would 
tend  to  oppress  the  public  with  high  prices,  and  also  that  their 
political  influence  was  to  be  feared,  but  a  careful  study  of  their 
effect  ranging  over  a  period  of  years  has  materially  modified  my 
opinion.  The  first  prominent  illustration  of  the  so-called  "trust" 
principle  was  the  consolidation  of  lines  of  railroad  into  vast  sys- 
tems, with  the  result  of  better  service,  and,  as  a  whole,  lower 
rates.  The  people  of 'the  United  States  now  get  their  transporta- 
tion at  about  one-half  those  of  other  principal  countries.  The 
next  was  the  Standard  Oil  Company,  under  whose  operations  the 
price  of  oil  has  declined  more  than  other  commodities  not  under 
trust  control.  Another  is  the  American  Sugar  Eefining  Com- 
pany, under  whose  operation  prices  have  averaged  50  per  cent 
lower  in  ten  years  succeeding  its  formation  than  they  did  during 
the  preceding  ten  years.  I  used  to  think  that  combinations  of 
capital  would  abrogate  competition,  but  experience  has  shown 
that,  instead  of  abrogating  competition,  il  has  elevated  that  force 
to  a  higher  plane.  If  a  combination  of  capital  in  any  line  tem- 
porarily exacts  a  liberal  profit,  immediately  capital  flows  into 
that  channel,  another  combination  is  formed,  and  competition 
ensues  on  a  scale  and  operates  with  an  intensity  far  beyond  any- 
thing that  is  possible  on  a  smaller  scale,  resulting  in  breaking 
down  of  the  combination  and  the  decline  of  profits  to  a  mini- 
mum. A  striking  illustration  of  this  is  found  in  the  sugar  and 
coffee  industries  to-day.  Arbuckle  Bros,  had  attained  a  com- 
manding position  as  roasters  and  sellers  of  coffee,  and  they  also 
sold,  but  did  not  refine,  sugars.  Because  the  American  Sugar 
Refining  Company  would  not  sell  them  cheaper  than  other  buy- 
ers of  sugar,  they  decided  to  go  into  the  sugar-refining  business, 
whereupon  leading  spirits  in  the  American  Sugar  Eefining  Com- 
pany, seeing  that  the  margin  in  the  coffee  business  was  good, 
decided  to  go  into  the  roasting  and  selling  of  coffee.  The  result 
has  been  that  this  contest  of  giants  has  reduced  the  profits  in 

130 


both  industries  to  a  minimum  if  hot  to  a  positive  loss,  making 
it  hard  for  smaller  manufacturers  and  dealers  to  live,  but  saving 
millions  of  dollars  for  consumers  that  would  have  otherwise  in- 
ured to  manufacturers  and  dealers. 

The  only  trusts  which  have  succeeded  for  any  length" of  time 
have  been  those  which  have  been  conducted  on  a  far-sighted  basis 
of  moderate  margins  of  profit,  relying  upon  a  large  turn-over  and 
the  economies  resulting  from  the  command  of  large  capital  in- 
telligently administered.  The  truth  of  this  is  illustrated  by  in- 
numerable failures  in  trust  organizations  to  control  prices,  recent 
illustrations  of  which  are  the  strawboard  trust,  the  starch  trust, 
the  first  wire  nail  trust,  and  the  old  steel  trust.  There  are  trusts, 
so  called,  in  nearly  every  branch  of  business,  and  there  is  good 
and  bad  in  all,  but  the  good  so  far  predominates  that  such  aggre- 
gations of  capital  should  be  encouraged,  accompanied  by  safe- 
guards against  abuses.  The  only  additional  safeguards  needed 
are  for  stockholders  and  investors,  whose  interests  are  often  sac- 
rificed through  lack  of  publicity.  The  average  investor  is  the 
chief  sufferer.  So  far  as  the  interest  of  consumers  is  concerned, 
it  is  amply  protected  now ;  first  by  competition,  as  I  have  shown, 
and  second  by  the  common  law  which,  if  invoked,  will  nullify 
any  contract  in  unreasonable  restraint  of  trade,  and  any  unrea- 
sonable combination  is  subject  to  indictment  for  conspiracy. 
Special  "trust"  statutes  are  not  necessary,  although  many  have 
been  enacted. 

As  to  the  right  to  combine,  it  is  so  closely  related  to  the  right 
to  contract  that  it  affords  a  most  interesting  question.  Commerce 
i&  nothing  but  a  body  of  contracts.  Every  purchase  and  sale, 
from  a  peanut  to  a  gold  mine,  and  every  transaction  in  the  move- 
ment of  merchandise;  every  agreement  between  employer  and 
employee  involves  a  contract  either  verbal,  written  or  implied. 
No  right  is  more  sacred,  and  none  has  been  more  carefully 
guarded  in  our  fundamental  law.  The  Constitution  of  the 
United  States,  Art.  1,  Sec.  10,  says :  "No  state  shall  pass  any  law 
impairing  the  obligation  of  contracts."  Art.  14,  Sec.  1,  says:  "No 
state  shall  make  or  enforce  any  law  which  shall  abridge  the  privi- 
leges or  immunities  of  citizens  of  the  United  States,  nor  shall 
any  state  deprive  any  person  of  life,  liberty  or  property  without 
flue  process  of  law,  nor  deny  to  any  person  within  its  jurisdiction 
the  equal  protection  of  the  law." 

It  seems  to  me  that  the  tendency  of  legislative  and  judicial 
bodies  in  this  country  just  now  to  sweepingly  condemn  contracts 
which  in  any  manner  restrict  or  regulate  trade  is  unwise  and 
against  public  policy.  If  capital  is  denied  the  right  to  combine, 

131 


labor  must  be  put  under  the  same  disability.  Such  statutes  as 
those  I  have  quoted  are  really  statutes  in  restraint  of  trade  rather 
than  in  the  interest  of  the  freedom  of  trade,  and  are  opposed  to 
the  greatest  good-  for  the  greatest  number. 

The  opinion  of  the  minority  (four  against  five)  of  the  Su- 
preme Court  of  the  United  States  in  the  Trans-Missouri  Traffic 
Agreement  case,  as  expressed  by  Judge  Brewer,  says: 

"If  there  is  one  thing  which  more  than  another  public  policy 
requires  it  is  that  men  of  full  age  and  competent  understanding 
shall  have  the  utmost  liberty  of  contracting,  and  their  contracts, 
when  entered  into  freely  and  voluntarily,  shall  be  held  sacred  and 
shall  be  enforced  by  courts  of  justice. 

"The  remedy  intended  to  be  accomplished  by  the  act  of  Con- 
gress was  to  shield  against  the  danger  of  contract  or  combination 
by  the  few  against  the  interest  of  the  many  and  to  the  detriment 
of  freedom.  The  construction  now  given,  I  think,  strikes  down 
the  interest  of  the  many  to  the  advantage  and  benefit  of  the  few. 
It  has  been  held  in  a  case  involving  a  combination  among  work- 
men, that  such  combinations  are  embraced  in  the  act  of  Congress 
in  question,  and  this  view  was  not  doubted  by  this  Court  (In  re 
Debs,  64  Fed.  Kep.,  724,  745-755;  158  U.  S.  564.)  The  inter- 
pretation of  the  statute,  therefore,  which  holds  that  reasonable 
agreements  are  within  its  purview,  makes  it  embrace  every 
peaceable  organization  or  combination  of  the  laborer  to  benefit 
his  condition  either  by  obtaining  an  increase  of  wages  or  diminu- 
tion of  the  hours  of  labor.  Combinations  among  labor  for  this 
purpose  were  treated  as  illegal  under  the  construction  of  the  law 
which  included  reasonable  contracts  within  the  doctrine  of  the 
invalidity  of  contracts  or  combinations  in  restraint  of  trade,  and 
they  were  only  held  not  to  be  embraced  within  that  doctrine 
either  by  statutory  exemption  therefrom  or  by  the  progress  which 
made  reason  the  controlling  factor  on  the  subject.  It  follows 
that  the  construction  which  reads  the  rule  of  reason  out  of  the 
•  statute  embraces  within  its  inhibition  every  contract  or  combina- 
tion by  which  workingmen  seek  to  peaceably  better  their  condi- 
tion. It  is,  therefore,  as  I  see  it,  absolutely  true  to  say  that  the 
construction  now  adopted  which  works  out  such  results  not  only 
frustrates  the  plain  purpose  intended  to  be  accomplished  by 
Congress,  but  also  makes  the  statute  tend  to  an  end  never  con- 
templated, and  against  the  accomplishment  of  which  its  provi- 
sions were  enacted." 

To  the  average  mind  it  looks  as  if  the  opinion  of  the  minority 
was  right  and  that  our  American  courts  and  legislatures  have 
been  "leaning  over  backward  in  their  efforts  to  walk  straight." 

132 


In  Europe  the  rule  seems  to  be  different,  as  is  evidenced  by  the 
celebrated  Mogul  Steamship  case  decided  by  the  highest  court 
in  England,  a  clear  statement  of  which  is  given  in  a  recent 
pamphlet  by  William  L.  Royal,  Esq.,  of  the  Virginia  bar : 

"Several  lines  of  steamships  traded  to  China  all  the  year. 
The  trade  was  unprofitable  except  in  what  is  called  'tea  season,' 
when  it  was  very  profitable.    The  losses  of  the  year  were  made 
up  and  a  profit  gained  by  the  freights  on  tea  in  'tea  season.' 
Another  line  of  steamers  traded  to  Australia  all  the  year  until 
'tea  season'  came  on,  when  its  steamers  were  diverted  to  Hankow 
to  get  a  part  of  the  profitable  tea  trade.    The  lines  which  traded 
to  China  all  the  year  entered,  thereupon,  into  an  agreement,  called 
here  'trusts'  or  'pools'  or  'monopolies'  or  'boycotts'  or  'contracts 
in  restraint  of  trade,'  or  whatever  else  of  the  same  sort  can  be 
suggested.    They  agreed  together  to  divide  out  freights  amongst 
themselves,  and  they  published  a  notice  to  all  merchants  in  China 
that  if  they  would  ship  everything  aJl  the  year  by  one  of  the 
conference  lines  they  would  be  allowed  a  rebate  upon  all  freights 
at  the  end  of  the  year  of  5  per  cent,  and  whenever  one  of  the 
steamers  of  the  Australian  line  came  to  Hankow  the  conference 
had  a  steamer  there  to  underbid  it  on  freights ;  so  that  whatever 
the  Australian  got  caused  a  loss.    Thereupon  the  Australian  line 
applied  to  the  English  courts  for  protection,  upon  the  ground 
that  this  combination  of  many  against  one  was  contrary  to  the 
principles  of  our  law.    It  is  plain  that  the  case  brought  up  for 
discussion  all  the  questions  relating  to  pools  and  trusts  now  agi- 
tating the  American  mind,  and  these  questions  received  a  treat- 
ment in  England  worthy  of  their  magnitude  and  scope. 

"The  case  was  tried  first  by  Lord  Chief  Justice  Coleridge  and 
Lord  Justice  Fry.  It  was  then  tried  by  Lord  Coleridge  alone,  and 
upon  appeal  from  his  decision,  by  Lord  Justices  Bowen  and  Fry, 
and  Esher,  master  of  the  rolls,  and  upon  appeal  from  them  to  the 
House  of  Lords,  it  was  heard  before  the  Lord  Chancellor,  Hals- 
bury,  Lord  Watson,  Lord  Macnaughten,  Lord  Bramwell,  Lord 
Morris,  Lord  Field,  and  Lord  Hannen.  Each  decision  was  in 
favor  of  the  conference,  and  every  one  of  these  twelve  eminent 
judges  except  Esher,  M.E.,  held  that  the  agreement  was  a  per- 
fectly good  and  valid  one,  according  to  the  principle  of  our  com- 
mon law. 

"The'guiding  principle  in  the  case  was  held  to  be  the  one 
stated.  If  the  parties  contemplated  their  own  improvement  only, 
it  was  immaterial  that  they  contemplated  injury  to  the  Aus- 
tralian, or  that  injury  to  him  would  be  the  result  of  their  acts; 
but  if  they  were  actuated  by  malice  toward  the  Australian,  then 

133 


the  agreement  would  have  been  a  vicious  one,  condemned  by  the 
principles  of  our  law.  This  was  held  to  be  the  test  in  all  such 
cases." 

The  idea  is  very  admirably  brought  out  in  the  opinion  that 
was  delivered  in  the  House  of  Lords  by  Lord  Field,  who  said : 

"It  follows,  therefore,  from  this  authority,  and  is  undoubted 
law,  not  only  that  it  is  not  every  act  causing  damage  to  another 
in  his  trade,  nor  even  every  intentional  act  of  such  damage,  which 
is  actionable,  but  also  that  acts  done  by  a  trader,  in  the  lawful 
way  of  his  business,  although  by  the  necessary  results  of  effective 
competition  interfering  injuriously  with  the  trade  of  another, 
are  not  the  subject  of  any  action. 

"Of  course  it  is  otherwise,  as  pointed  out  by  Lord  Holt,  if  the 
acts  complained  of,  although  done  in  the  way  and  under  the 
guise  of  competition  or  other  lawful  right,  are  in  themselves 
violent  or  purely  malicious,  or  have  for  their  ultimate  object 
injury  to  another  from  illwill  to  him,  and  not  the  pursuit  of  law- 
ful rights." 

The  Mogul  steamship  case  finds  a  parallel  in  a  recent  case 
described  in  the  Berlin  Tageblatt,  as  follows: 

"The  highest  court  of  the  German  Empire  sitting  at  Leipsic, 
has  rendered  an  important  decision,  which  we  summarize  below, 
concerning  combines  or  trusts.  The  decision  will  be  of  great 
interest  to  the  other  nations,  and  particularly  to  the  United 
States,  where  trusts  have  come  to  exercise  such  a  prominent  part 
in  commercial  and  industrial  affairs.  The  court  mentioned  has 
declared  emphatically  that  trusts  and  similar  combines  are  en- 
tirely legal.  The  grounds  upon  which  this  decision  was  based 
were  as  follows :  When  in  certain  industrial  pursuits  the  prices 
of  products  are  sinking  so  low  as  to  make  business  impossible  or 
as  to  endanger  the  successful  carrying  on  thereof,  the  crisis  which 
necessarily  follows  is  not  only  disastrous  to  the  individual  con- 
cern, but  also  to  internal  affairs  generally.  For  this  reason  it  is 
for  the  interest  of  the  entire  state  that  inadequate  low  prices 
shall  not  prevail  too  long  in  any  industrial  branch.  Realizing 
this  principle,  the  legislative  bodies  have  repeatedly,  and  only 
recently,  undertaken  to  bring  about  an  increase  in  the  prices  of 
certain  products  by  the  establishment  of  protective  duties.  For 
this  reason  it  cannot  be  deemed  certainly,  or  generally  speaking 
obnoxious  to  the  interests  of  the  community  when  tie  manu- 
facturers of  certain  articles  form  what  is  called  a  'trust*  with  the 
object  in  view  of  preventing  ruinous  competition,  and  for  the 
purpose  of  mitigating  the  downward  tendency  in  the  prices  of 

134 


their  particular  manufactures.  On  the  contrary,  such  combina- 
tions can  be  looked  upon,  not  only  as  warranted  by  the  instinct 
of  self-preservation,  but  as  a  measure  for  the  interest 
of  the  whole  community  as  well.  Especially  is  this  true 
in  cases  where  prices  are  so  low  that  the  manufacturers  of  the 
articles  are  on  the  verge  of  financial  disaster.  For  this  reason 
the  building  of  syndicates  or  trusts  has  been  designated  by  a 
number  of  authorities  as  a  means  which,  when  properly  managed, 
would  prove  extremely  expedient  to  prevent  detrimental  and 
unwarranted  over-production." 

Many  good  people  have  imagined  a  bogey  monster  that  doesn't 
exist.  They  have  accepted  as  facts  the  fancies  of  sensational 
journalism.  The  natural  advances  in  price  when  demand  exceeds 
supply  have  been  debited,  and  the  declines  when  supply  exceeds 
demand  have  not  been  credited,  to  say  nothing  of  economies  in 
production  and  distribution  which  have  made  the  present  age  the 
consumers'  millennium. 

Never  before  would  a  day's  labor  buy  so  much  of  the  comforts 
and  luxuries  of  life,  but  education  of  the  masses  to  the  wants 
of  intelligence  has  progressed  even  faster  and  the  rewards  to  the 
inventors  and  the  captains  of  industry  and  finance,  who  have 
made  this  evolution  possible,  are  envied.  It  is  overlooked  that 
corporations  are  really  co-operations;  that  the  number  of  part- 
ners as  stockholders  in  any  industry  is  increased,  that  anyone 
can  become  a  partner,  and  that  instead  of  being  concentrators  of 
wealth,  they  are  distributers  of  wealth.  It  has  been  assumed  that 
labor  would  be  oppressed  by  the  organization  of  capital,  but  ex- 
perience has  shown  that  organized  labor  has  met  organized  capi- 
tal, and  that  the  largest  organizations  of  capital  have  furnished 
the  steadiest  employment  and  have  paid  larger  wages  than  indi- 
vidual employers.  The  grievances  of  individuals  injured  in  this 
evolution  of  industries  have  been  magnified  and  the  general  good 
minimized.  The  lesson  of  the  stage  driver  thrown  out  of  work 
by  the  locomotive,  or  the  workman  by  the  machine,  is  forgotten 
when  the  traveling  salesman  who  loses  his  job  through  the  econ- 
omies of  industrial  organization  appeals  to  public  sympathy.  That 
wider  markets  are  necessary  and  that  large  capital  intelligently 
administered  is  necessary  to  find  them  is  not  appreciated.  That 
"the  rule  of  reason,"  as  expressed  by  the  minority  of  the  Supreme 
Court  of  the  United  States  in  the  Trans-Missouri  case,  is  in  dan- 
ger of  being  expunged  from  our  statutes. 

Within  the  limits  of  a  paper  like  this  it  is  of  course  impossible 
to  do  more  than  speak  suggestively  and  touch  upon  but  few  of  the 


135 


many  points  involved,  but  I  have  faith  that  with  further  study  of 
this  subject  by  the  American  people  that  the  facts  will  become 
plainer  and  they  will  appreciate  that 

"  Through  the  ages  one  increasing  purpose  runs, 
And  the  thoughts  of  men  are  widened  by  the  process  of  the  suns." 

STEPHEN  P.  COELISS. 

New  York  Traveling  Men's  Association. 

The  gathering  in  Chicago  under  the  auspices  of  the  Civic 
Federation  to  discuss  the  all-absorbing  subject  of  "Trusts"  will 
doubtless  present  nearly  as  many  different  opinions  as  there  are 
delegates  assembled.  And  while  it  will  not  be  possible  to  formu- 
late any  controlling  decision  upon  the  subject,  there  will  be  ideas, 
opinions  and  suggestions  presented  which  will  prove  to  be  of 
value  in  determining,  per  chance,  a  solution  of  the  trust  prob- 
lem, through  regulation,  rather  than  at  an  attempt  of  absolute 
prohibition.  The  evolution  in  business  life  that  has  led  to  a 
legitimate  combination  of  a  number  of  concerns  in  the  same  in- 
dustry cannot  be  considered  as  the  growth  of  a  day  nor  the  rea- 
sons leading  to  its  fulfillment  ignored.  The  possibility  of  their 
creation  is  attributed  to  various  causes.  A  number  of  students 
of  the  question  declare  that  the  tariff,  prohibitory  in  many  of  its 
classifications,  is  the  foundation  upon  which  the  so-called  trusts 
are  enabled  to  successfully  build. 

Others  contend  that  competition  is  the  chief  factor,  the  pri- 
mary reason  for  the  formation  of  so  many  industries  under  one 
general  head.  The  former  methods  of  conducting  business  made 
necessary  large  expenditures  of  money  in  administration  and 
distribution — by  the  smaller  corporations,  firms  and  individuals 
seeking  a  market  for  their  productions.  In  the  new  order  of 
affairs  there  is  a  large  saving  of  these  expenses.  It  is  undoubtedly 
true  that  this  transition  will  cause  a  number  of  persons  to  lose 
their  positions,  yet  the  proposition  or  movement  must  be  consid- 
ered from  the  standpoint  of  its  effect  upon  the  community  rather 
than  the  individual.  The  legitimate  results  that  should  accrue 
from  the  federation  of  a  number  of  manufacturers  for  instance, 
under  a  general  management,  are  an  improvement  in  their  meth- 
ods of  business  in  every  way,  reducing  waste  to  a  minimum,  pro- 
ducing a  better  article  than  before  for  the  same  or  less  money, 
no  attempt  being  made  to  control  production  or  output,  not 
capitalizing  in  excess  of  their  business  needs.  If  this  plan  is  fol- 
lowed, it  cannot  prove  much  of  a  menace  to  our  business  econ- 

136 


0>^ 


THOMAS  J.  MORGAN 
H.  W.  PALMER 
JOHN  B.  CONNER 


JAMES  R.  WEAVER 
CHAS.  D.  WILLARD 
MORRIS  M.  COHN 


omy.  A  large  part  of  the  friction  that  has  existed  between  cap- 
ital and  labor,  causing  strikes,  lockouts  and  riots,  was  the  result, 
in  part,  of  overproduction.  The  product  was  unloaded  at  a  loss, 
the  owners  tried  to  recompense  themselves  by  cutting  the  wages 
of  their  workmen.  This  evil  ought  now  to  be  remedied.  While 
it  is  unquestionably  true  that  capital  is  more"  strongly  entrenched 
than  ever  before,  the  same  can  be  said  of  the  labor  unions,  these 
are  having  greater  influence  than  heretofore,  because  they  are 
choosing  more  intelligent  and  conservative  leaders,  who  with 
advanced  ideas  recognize  the  law  of  mutual  responsibility.  The 
new  combines,  honestly  capitalized  and  honestly  conducted, 
ought  to  be  in  a  great  degree  fruitful  of  peace  and  harmony  in 
the  industrial  life  of  our  country. 

A  recent  writer  has  stated :  "That  the  conquests  of  the  future 
are  to  be  won  by  the  industrial  armies."  It  is  a  fact  that  we 
lead  the  world  in  labor-saving  machinery  and  in  intelligent  work- 
men to  operate  it.  The  swift  evolution  in  our  manner  of  doing 
things  in  the  manufacturing  and  mercantile  economy  of  our  land 
will  place  us  far  ahead  of  the  rest  of  the  world  in  this  direction, 
as  the  wildest  imagination  can  dream  of.  In  these  advanced 
movements  it  is  not  fair  to  impugn  the  motives  of  those  engaged 
nor  to  declare  everything  as  evil  because  it  upsets  or  changes 
former  methods  or  old  directing  forces.  It  is  a  matter  to  be 
closely  studied,  for  the  true  thing  in  the  new  era  has  come  to  stay, 
and  the  question  of  the  hour  is,  how  shall  the  changes  necessarily 
a  result  of  the  new  environment  best  be  made  that  they  conserve 
and  harmonize  conflicting  interests?  Undoubtedly  these  at  first 
will  loom  up  mountain-like  in  their  proportions,  but  will  silently 
disappear  with  experience  in  the  new  life  and  its  practical 
demonstration  of  the  undeniable  fact  that  if  it  shaH  endure  the 
employer,  employee,  and  consumer  must  be  harmonious  elements 
of  its  existence. 

Opponents  of  this  transformation  in  our  industrial  life  natur- 
ally say  that  the  large  body  of  consumers  will  be  the  sufferers,  that 
as  the  combinations  will  control  products  they  will  raise  prices, 
and  that  wages  will  be  at  their  mercy ;  facts  at  present  and  proba- 
bilities of  the  future,  however,  do  not  indicate  this  line  of  con- 
duct. Those  favoring  industrial  concentration  argue  that  it 
ought  to  strengthen  our  industries  and  be  a  safeguard  against 
financial  difficulties,  when  compactly  organized,  properly  con- 
ducted and  honestly  financed;  that  holding  in  check  reckless 
competition  will  curtail  unwise  credits  and  overproduction,  that 
it  will  be  easier  to  regulate  the  supply  to  the  demand,  that  self- 
interest  will  best  be  subserved  by  disposing  of  products  at  fair 

137 


prices,  that  when  this  consolidating  of  our  producing  and  dis- 
tributing forces  becomes  an  economic  fact,  instead  of  dwarfing 
individuality,  it  should  present  greater  incentives  and  rewards 
for  the  exercise  of  intelligence,  energy  and  enterprise  of  the  indi- 
vidual. 

So  far  we  have  been  considering  the  phase  of  combinations, 
corporations,  etc.,  based  upon  principles  of  integrity  in  concep- 
tion and  honesty  of  purpose  in  administration.  But,  there  are 
aspects  and  conditions  prevailing  in  other  corporations,  large  and 
small,  diametrically  the  opposite  to  the  line  of  conduct  set  forth 
by  those  that  may  be  considered  in  any  way  a  benefit  to  our  peo- 
ple as  a  whole.  These  so-called  trusts  are  of  every  conceivable 
kind,  capitalized  at  large  sums  far  beyond  any  possible  demands 
of  production,  issue  great  blocks  of  preferred  and  common  stock, 
knowing  that  a  dividend  can  never  be  paid  upon  it,  but  with 
tempting  promises  and  smooth  persuasion  availing  themselves  of 
the  speculative  craze  so  rampant,  to 'dispose  of  the  stocks  to  a 
gullible  people.  Promoters  and  schemers  are  in  the  main  respon- 
sible for  this  sort  of  a  combine,  relying  upon  the  sale  of  stock 
for  their  pay  for  creating  the  concerns.  Several  of  the  states 
of  our  union  issue  charters  to  all  corporations  applying  for  them, 
without  discrimination,  accept  the  fees,  require  no  guarantee  of 
good  faith  to  the  public;  so  many  gigantic  unscrupulous  cor- 
porations are  started  upon  a  career  that  can  have  but  one  ending, 
and  that  is  failure.  Along  its  track  are  the  wrecks  financially  of 
ignorant,  innocent  investors,  who  were  led  to  believe  in  the  sound- 
ness of  the  corporation  because  the  state  sanctioned  its  birth, 
and  its  directors,  men  of  reputation.  Of  course  the  illegitimate 
trust,  corporation,  combination  or  whatever  it  may  be  called, 
ought  to  be  an  exceptional  thing,  .still  there  should  be  such  safe- 
guards thrown  about  and  such  guarantees  exacted,  that  the  crea- 
tion of  any  will  be  a  misdemeanor.  So  many  industrial  combina- 
tions are  so  largely  capitalized  and  present  such  a  bonded  indebt- 
edness that  they  will  no  doubt  create  suspicion  in  the  minds  of  the 
employed  as  to  the  possibility  of  their  becoming  paying  institu- 
tions; the  sequel  to  suspicion  is  unrest,  dissatisfaction,  revolt;  this 
must  be  avoided  by  regulation  if  possible,  by  control  if  necessary. 

So  much  regarding  the  abuse  of  trusts.  As  to  the  remedies : 
First  of  all  the'  subject  should  be  kept  divorced  from  politics.  It 
is  not  at  all  necessary  that  there  shall  be  a  plank  in  the  platforms 
of  both  parties  declaiming  against  trusts,  for  the  party  holding 
the  last  convention  will  simply  exceed  the  force  of  language  used 
by  the  other  in  denunciation  of  them.  It  seems  to  me  that  the 
state,  issuing  a  charter  to  a  corporation  authorizing  directly  or 


indirectly  the  sale  of  bonds  and  stocks,  should  have  a  commission 
or  the  secretary  of  state,  in  his  capacity  as  such,  should  have 
charge  of  corporate  affairs,  and  determine  upon  a  thorough  ex- 
amination, those  worthy  of  charters,  as  well  as  a  surveillance  over 
combinations,  corporations,  etc.,  organized  in  any  other  state 
that  seek  a  market  for  their  bonds  and  stocks  within  the  limits 
of  the  state  of  which  said  commission  is  a  part.  That  all  com- 
binations, corporations  or  trusts  shall  pay  to  the  state  of  which 
they  are  a  part,  a  tax  upon  their  plant  or  franchise,  the  value  of 
which  shall  be  determined  by  its  earning  power.  As  to  national 
supervision  of  the  question,  there  may  be  laws  now  upon  the 
statute  books  giving  Congress  all  necessary  control,  if  not,  I 
suggest  that  a  commission  shall  be  created  by  Congress  who  shall 
protect  investors  from  the  evils  sure  to  accrue  from  over-capitali- 
zation, they  also  to  have  power  to  pass  upon  the  quality  of  the 
securities  behind  any  issue  of  bonds  and  stocks  thrown  upon  the 
market  by  said  combinations,  corporations  and  trusts.  Pub- 
licity is  a  safeguard  that  will  in  no  way  injure  the  concentration 
of  capital  and  effort  honestly  directed.  A  paner  published  in 
New  York  recently  said: 

"There  is  a  bill  now  before  Congress  intended  to  cover  the 
whole  subject  of  trusts;  it  is  very  simple  and  quickly  read.  It 
does  not  say  one  word  about  the  tariff,  the  labor  question,  silver, 
railroads,  or  anything  else  which  is  commonly  supposed  to  be  the 
cause  of  trusts.  It  does  not  even  say  that  corporations  must  or- 
ganize under  this  national  law.  In  fact  it  ig  admitted  that  many 
corporations  will  continue  to  exist  under  state  laws.  But  this 
much  is  said :  Where  a  corporation  starts  out  to  do  a  large  busi- 
ness, control  a  large  industry,  and  drive  a  large  number  of  people 
out  of  their  accustomed  avocations,  something  must  be  returned 
to  the  community  in  lieu  of  it,  and  this  something  is  absolutely 
safe  securities.  These  securities,  moreover,  must  be  so  safe- 
guarded that  the  great  mass  of  the  community  can  take  hold  of 
•hem.  When  this  is  accomplished  the  trust  question  is  settled." 

The  great  interest  excited  in  this  country  through  the  report 
of  the  American  consul  at  Limoges,  Mr.  Walter  T.  Griffin,  on 
what  is  known  in  England  as  the  Smith  Combination  Scheme, 
caused  the  Civic  Federation's  Conference  Committee  on  Arrange- 
ments to  invite,  through  Consul  Marshal  Halstead,  of  Birming- 
ham, Mr.  E.  J.  Smith,  of  that  city,  the  acknowledged  father  of  the 
plan,  to  address  the  conference.  Mr.  Smith  could  not  attend  but 


sent  the  following  paper  which  thoroughly  describes  his  system. 
Also,  through  Mr.  Halstead,  Mr.  A.  W.  Still,  editor  of  the  Bir- 
mingham Gazette,  who  opposes  Mr.  Smith's  plan,  was  invited  to 
attend.  He  sent  the  paper  which  follows  that  of  Mr.  Smith. 

E.  J.  SMITH. 

Birmingham,  England. 

I  have  received  through  Mr.  Halstead,  our  American  Con- 
sul in  Birmingham,  your  kind  invitation  to  address  the  con- 
ference ^  of  your  Federation  in  September.  I  have  delayed  my 
reply  because,  had  I  replied  at  once,  I  could  only  have  declined, 
and  I  have  waited  to  discover  if  it  were  possible.  I  find  it  impos- 
sible, and  now  hasten  to  express  my  thanks  and  to  say  that  noth- 
ing would  have  given  me  greater  pleasure  than  to  meet  you,  had  I 
been  able  to  do  so,  but  the  press  of  business  in  England  forbids 
that  I  should  leave  it  for  so  long  just  now.  I  can  only  hope  that 
a  visit  to  your  country  is  a  pleasure  simply  deferred. 

I  have  been  given  to  understand  that  you  would  like  to  dis- 
cuss at  your  conference  the  trade  movement  with  which  my 
name  is  identified,  and  that  you  would  like  something  from  me 
to  help  you.  If  you  care  to  read  to  your  members  this  letter,  it 
may  provide  some  apology  for  my  absence. 

I  gather  from  the  list  of  questions  you  have  sent  me  that 
your  attention  is  fixed  upon  the  "Trade  Trusts"  formed  so  natur- 
ally in  your  country,  and  sometimes  in  mine.  I  hesitate  to  ex- 
press any  opinion  concerning  things  with  which  I  am  not  fully 
conversant,  and  can  therefore  say  nothing  about  your  "Trusts." 
They  may  be  formed  upon  principles  which  avoid  the  evils  gen- 
erally belonging  to  the  "trust"  system.  Those  evils  are  over- 
capitalization, which  must  be  a  curse  wherever  it  exists;  the  de- 
sire to  establish  monopolies,  which  must  help  to  destroy,  not 
build  up,  the  commerce  of  any  country  and  the  happiness  of 
its  people ;  and  selfishness,  which  leaves  out  of  consideration  the 
element  of  labor,  which  has  its  rights  as  well  as  capital.  If 
you  have  any  trusts  which  do  not  contain  these  evfls,  you  have 
some  "better  way"  which  I  do  not  understand. 

I  must  take  it  for  granted  that  all  these  attempts  to  im- 
prove the  position  of  certain  people  in  business  have  been  made 
because  there  was  some  evil  to  cure.  I  know  what  it  is  in  my 
own  country.  It  is  the  desire  to  make  haste  to  be  rich.  It  is  a 
desire  which  destroys  the  best  impulses  of  humanity;  it  leads 
to  overproduction,  insane  competition,  the  lowering  of  wages, 


and  bankruptcy.  So  far  as  I  have  been  able  to  study  the  "trust" 
system,  it  makes  greater  haste  to  be  rich,  and  it  does  not  pro- 
vide the  remedy  for  the  evils  I  have  just  mentioned. 

I  believe  in  trying  to  find  a  remedy  for  the  sin  of  undue  com- 
petition. I  believe  in  putting  every  trade  in  a  position  which 
will  enable  it  to  demand  and  obtain  from  the  consumer  a  fair 
price  which  carries  with  it  a  fair  profit,  and  which  enables  it  to 
pay  a  fair  wage  to  the  real  producer.  Having  done  this,  I  would 
make  it  compulsory  that  the  fair  profit  should  be  obtained  and 
the  fair  wages  paid. 

And  I  would  do  all  this  without  strife.  I  believe  in  trade 
unionism,  but  if  it  is  good  for  one  side  it  is  good  for  the  other. 
The  judgment  of  workmen  is  no  more  to  be  trusted  than  is 
that  of  employers.  But  there  is  no  division  of  interest  between 
them.  In  each  case  it  is  a  matter  of  money,  because  with  money 
you  can  buy  the  necessities  or  the  luxuries  of  life.  Neither  side 
can  make  money  without  the  help  of  the  other.  Anything  which 
goes  against  the  interest  of  the  employer  is  fatal  to  the  interest 
of  the  employed.  I  believe,  therefore,  in  so  binding  them  to- 
gether that  their  interests  must  always  be  treated  as  one. 

But  this  interest  can  only  be  made  secure  by  honest  dealing. 
Therefore  the  consumer,  upon  whom  everything  depends,  can 
be  charged  only  a  fair  price. 

These  are  the  objects  aimed  at  in  what  is  called  "The  New 
Trades  Combination  Movement."  Whether  or  not  the  methods 
adopted  are  calculated  to  secure  them  is,  I  presume,  the  question 
you  wish  to  discuss. 

I  do  not  intend  to  weary  you  with  details  which  you  can  read 
for  yourselves  in  the  printed  matter  which  has  been  before  the 
public  for  years,  and  which  you  can  now  obtain  in  book  form. 
These  details  are  so  far  important  that  without  them  the  scheme 
cannot  be  successfully  carried  out,  but  they  are  too  elaborate 
to  describe  here.  I  will  content  myself  with  giving  you  the 
main  principles  of  the  plan  whereby  it  has  been  found  possible 
to  obtain  fair  profits  and  pay  fair  wages,  prevent  strikes  and  lock- 
outs from  happening,  and  to  do  all  this  by  charging  only  a  fail- 
price  to  the  consumer,  and  all  without  any  attempt  to  establish 
a  monopoly. 

I  have  not  had  the  advantage  of  studying  your  system  of 
trading,  and  therefore  cannot  speak  with  authority  upon  some 
points  which  are  of  great  importance  in  England.  It  is,  how- 
ever, exceedingly  likely  that  one  evil  which  the  system  is  in- 
tended to  cure  is  as  real  with  you  as  with  us.  I  allude  to  the 
pernicious  practice  of  selling  manufactured  articles  without  first 

141 


ascertaining  the  real  cost  of  production.  After  years  of  exam- 
ination I  have  come  to  the  conclusion  that  not  more  than  one- 
third  of  our  manufacturers  carefully  and  properly  take  out  their 
costs.  From  this  arises  the  foolish  and  unnecessary,  and  even 
morally  criminal,  underselling,  which  has  made  some  remedy  a 
great  necessity.  The  first  part  of  the  plan  is,  therefore,  to  in- 
sist upon  the  cost  of  production  being  ascertained  hy  the  joint 
wisdom  and  practical  knowledge  of  the  whole  of  the  members  of 
any  trade  sitting  in  conference.  Should  anyone  suppose  that 
this  is  impossible  or  even  difficult,  I  can  only  reply  that,  notwith- 
standing the  greatest  prejudice,  suspicion,  and  rivalry,  it  has 
been  done  successfully  over  and  over  again,  and  that  it  forms 
the  very  foundation  of  the  system  under  which  many  trades  here 
both  make  and  sell.  The  removal  of  ignorance,  the  restraint 
of  recklessness,  and  the  mutual  help  which  can  only  come  from 
mutual  confidence,  in  no  way  interferes  with  the  proper  and  law- 
ful competition  and  enterprise  of  individuals  without  which 
manufacturing  would  become  stereotyped  and  stagnant.  Of  this 
we  have  had  ample  evidence. 

Of  course  it  is  supposed  that  an  association  has  been  formed, 
and  that  rules  and  regulations  providing  for  every  necessity 
have  been  drawn  up  and  adopted.  These  include  provisions  for 
the  detection  of  underselling,  or  the  violation  of  the  conditions 
under  which  the  association  works,  the  imposing  of  penalties 
when  such  breaches  of  trust  are  proved,  and  the  establishment 
of  a  monetary  guarantee  which  can  be  called  upon  if  found  neces- 
sary. This  latter  is  accomplished  by  a  somewhat  original  method 
which  avoids  the  inconvenience  of  having  to  take  necessary  capital 
out  of  a  business  to  lie  idle  in  a  bank.  The  regulations  also  pro- 
vide for  the  fair  claims  of  each  class  of  customer,  the  fixing  of 
cash  discounts,  and  the  charges  for  carriage. 

So  far  it  can  be  truthfully  said  that  there  is  very  little  in 
the  system  which  could  be  called  new,  excepting  the  joint  cost- 
taking.  The  arrangements  are  probably  more  complete  than  will 
be  found  in  other  associations,  because  so  many  trades  have  as- 
sisted in  making  them  so,  but  they  are  not  original. 

The  feature  of  the  plan  which  is  probably  new  is  that  which 
follows  all  I  have  mentioned,  namely,  a  thorough  arrangement 
and  allfance  between  employers  and  employed.  This  neither 
stereotypes  wages  nor  restricts  the  higher  claims  of  those  who 
by  force  of  superior  ability  of  any  kind  ought  to  be  able  to  com- 
mand better  positions  than  others.  It  does  not  interfere  with 
the  wages  already  paid  in  the  separate  factories,  and  it  does  not 
attempt  to  bring  about  uniformity  of  wages.  Tt  does  not  hand 

142 


over  employers  to  the  mercy  of  a  trades  union,  or  take  away 
from  them  in  any  way  the  right  and  the  power  to  manage  their 
business  in  their  own  way.  It  does  not  aim  at  the  destruction 
of  trades  unionism — it  enunciates  the  principle  in  the  surest 
way  by  making  employers  trades  unionists  themselves.  Having 
formed  a  union  on  the  one  hand  and  an  association  on  the  other, 
it  brings  both  together  for  one  practical  purpose  and  one  com- 
mon good.  It  prevents  disputes  from  becoming  quarrels,  puts 
an  end  to  strikes  by  removing  the  causes  of  them,  compels  the 
obtaining  of  fair  profits,  and  secures  to  the  workmen  payment 
for  their  services  which  insures  their  good- will  and  hearty  co- 
operation. This  is  done  by  the  carrying  out  of  the  following 
agreement  between  the  two  forces,  whose  interests  are  presum- 
ably one : 

1.  No  employer  to  engage  a  workman  who  is  not  a  member 
of  the  workmen's  union. 

2.  No  workman  to  accept  a  situation  with  any  employer  who 
does  not  sell  at  such  prices  as  include  the  minimum  profit  fixed 
during  the  cost  taking  process,  or  which  may  be  fixed  from  time 
to  time  by  the  employers'  association  and  approved  by  the  joint 
board. 

3.  No  workman  to  be  permitted  to  leave  his  situation  and  no 
employer  to  be  permitted  to  discharge  a  workman  on  account  of 
any  dispute  as  to  wages,  or  the  hours  and  conditions  of  labor. 

4.  A  wages  and  conciliation  board  to  be  formed  of  half  from 
each  side,  to  Avhom  all  such  disputes  may  be  referred,  and  whose 
decision,  or  the  decision  of  its  arbitrator,  must  be  accepted  on 
both  sides  or  the  alliance  ended. 

5.  The  regulations  as  to  the  supply  of  work  people  of  a  satis- 
factory kind  to  be  a  mutual  matter,  with  a  view  of  making  i1 
neither  superfluous  nor  inadequate. 

6.  Defaulting  members,  or  outside  competitors,  if  any,  to 
be  fought,  if  fighting  is  considered  necessary,  by  both  sides  unit 
edly,  and  the  cost  evenly  divided. 

7.  A  guarantee  to  be  given  by  the  employers  that  the  wages 
paid  in  each  factory  at  the  time  of  the  signing  of  the  alliance 
shall  never  be  reduced  while  the  alliance  continues,  unless  it  may 
be  considered  necessary  by  the  whole  of  the  board. 

8.  A  bonus  on  existing  wages  to  be  paid  by  each  employer 
from  the  date  when  the  board  has  decided  that  it  is  sufficiently 
strong  to  enforce  the  selling  prices  upon  which  the  minimum 
profit  has  been  fixed — that  is,  when  a  sufficient  number  of  em- 
ployers ami  employed  have  been  hrnusrht  into  the  bargain;   the 


employers'  association  to  be  the  first  to  bring  a  recommendation 
to  the  board  to  this  effect.  The  percentage  of  the  bonus  to  de- 
pend upon  the  proportion  of  the  Avages  to  the  proportion  of  the 
cost  of  material  which  make  up  the  selling  prices. 

10.  No  further  bonus  to  be  paid  on  any  advance  in  selling 
prices  which  only  covers  any  advance  in  the  cost  of  materials, 
but  this  to  be  proved  to  the  satisfaction  of  the  board,  which  may 
appoint  some  independent  person  to  investigate. 

11.  The  first  bonus  paid  to  work  people  to  be  a  fixture,  but 
all  other  bonuses  to  be  subject  to  a  sliding  scale  depending 
upon  the  increase  or  decrease  of  real  profit  obtained.     Should  sell- 
ing prices  be  lowered  simply  in  proportion  to  the  lower  cost  of 
materials,  the  bonus  shall  not  be  affected. 

12.  Any  increase  or  decrease  in  selling  prices  to  be  approved 
by  the  board,  or  its  arbitrator,  before  being  put  into  operation. 

These  are  the  conditions  upon  which  the  two  parties  to  the 
agreement  consent  to  bury  the  hatchet  and  work  together  for 
mutual  good.  There  is  no  necessity  to  point  out  how  strong  such 
amalgamation  must  be.  It  can  accomplish  all  that  it  is  intended 
to  do.  The  principal  charge  against  it  is  that  it  may  do  too 
much.  The  power  so  obtained,  it  is  urged,  may  be  abused,  and 
so  the  consumer  may  have  to  pay  an  unfair  price  for  the  goods 
he  has  to  buy. 

This  is  a  large  question,  and  one  which  it  is  impossible  to 
reply  to  thoroughly  here.  I  have  tried  to  do  it  elsewhere,  and 
I  start  with  saying  that  it  is  absolutely  impossible  that  such  a 
thing  should  happen.  It  may  happen  with  trusts,  syndicates, 
monopolies  of  every  kind,  but  this  system  is  neither.  The  safe- 
guards against  monopoly,  and  therefore  against  unjust  charges, 
are: 

1.  There  is  no  restriction  attempted  against  newcomers  into 
any  trade;   therefore  if  large  profits  are  obtained,  overproduc- 
tion will  make  smaller  profits  absolutely  essential. 

2.  The  work  people  have  to  consent  before  any  advance  can 
be  declared.     They  will  consent  readily  enough  while  they  are 
fully  employed,  but  as  the  bonus  does  not  compensate  them  for 
short  time,  they  will  not  consent  if  there  is  danger  of  driving 
away  any  trade.     This  is  not  theory  only.     From  every  wages 
board — and  I  am  chairman  of  many — the  desire  to  keep  selling 
prices,  and  therefore  wages,  at  a  reasonable  level,  is  most  strongly 
expressed  by  the  work  people.     In  one  alliance  the  work  people 
refused  to  receive  any  further  bonus  or  to  consent  to  any  higher 
profits. 

,   144 


But  the  test  of  any  theory  must  be  its  experiences.  I  chal- 
lenge anyone  to  show  that  in  any  trade  whatever,  working  under 
the  alliance  methods,  any  attempt  even  to  make  unjust  profits 
has  heen  made,  yet  the  principles  have  been  in  operation  for 
eight  years. 

It  is  right  that  the  consumer  should  be  protected  against  un- 
just charges,  but  does  anyone  in  his  senses  believe  that  these 
charges  can  ever  last  for  long?  Even  successful  monopolies  are 
generally  short-lived.  There  is  no  method  yet  discovered  by 
which  a  few  people  can  for  long  absolutely  control  the  manufac- 
ture of  any  necessary  article.  They  may  do  so  for  a  time,  and  even 
make  wealth,  but  the  end  must  come — generally  speaking,  it 
comes  even  before  the  wealth  is  made.  In  the  combination 
system  I  advocate,  it  must  be  remembered  that  the  profits  are 
carefully  ascertained,  printed,  and  circulated  amongst  the  mem- 
bers. They  cannot  be  concealed,  and  the  temptation  to  over- 
production cannot  be  restrained  should  these  profits  be  too  high. 
And  if  they  are  not  too  high,  the  consumer  has  no  case.  He 
has  never  troubled  himself  when  profits  have  been  too  lowj  he 
has  no  sympathy  with  the  bankrupt  whose  goods  he  has  been 
able  to  buy  below  cost,  nor  with  his  creditors ;  he  may  have  called 
the  manufacturer  a  fool — with  good  reason — but  he  has  had  no 
pity.  So  long  as  only  just  profits  are  imposed  upon  him,  I  have 
no  pity  for  the  consumer. 

But  the  consumer  benefits  very  naturally — indirectly — by  a 
fair  profit  being  obtained.  It  comes  back  to  him  in  many  ways, 
which  I  have  tried  to  prove  in  an  article  on  this  subject.  He 
suffers  in  the  same  proportion  from  bankruptcies'  and  starvation 
wages.  But  if  he  does  not  care  to  pay  a  fair  price  for  his  goods, 
he  can  make  for  himself.  He  has  no  right  to  expect  other  people 
to  work  for  his  benefit  without  sufficient  compensation. 

I  do  not  think  I  need  say  more  to  help  you  in  the  dis- 
cussion of  this  question.  It  would  take  many  articles  to  describe 
the  method  fully.  I  have  given  you  its  main  principles.  I  wish 
only  to  add  one  more  suggestion:  America,  by  its  tariffs,  does 
much  to  keep  its  trade,  and  to  keep  out  other  people,  but  it  does 
not  prevent  them  from  paying  the  tariff  and  selling  in  America 
very  often  without  profit.  Whenever  this  is  done  your  profits 
must  also  suffer,  and  when  we  compete  with  you  outside  your 
country  and  ours,  the  competition  is  abused.  I  am  looking  for- 
ward to  the  day  when  the  two  countries  will  be  drawn  together 
by  a  bond  stronger  than  that  of  sentiment  only.  If  we  are  a 
nation  of  shopkeepers,  you  must  be  very  near  to  it.  Combina- 

145 


tioii  means  unit)'  of  purpose  and  a  desire  and  determination  to 
get  what  belongs  to  us.  I  advocate  nothing  beyond  this,  but  I 
think  I  can  see  a  chance  of  combination  between  the  respective 
trades  in  the  two  countries,  securing  to  each  advantages  which 
would  be  impossible  to  either  without  it. 

A.  W.  STILL. 

Editor  Gazette,  Birmingham,  England. 

Even  if  I  did  not  most  highly  esteem  the  honor  of  being 
permitted  to  contribute  to  the  deliberations  of  this  great  repre- 
sentative conference,  I  should  have  deemed  it  my  duty  to  prompt- 
ly accept  your  invitation  to  submit  a  critical  comment  upon  what 
has  been  known  in  Birmingham  as  the  "Smithsonian  System'' 
of  Trades  Combination.  It  has  been  my  lot  to  watch  the  evo- 
lution of  this  system  and  its  author  from  the  outset,  and,  in 
the  course  of  professional  duty,  I  have  had  to  study  its  effects 
upon  the  commercial  and  industrial  welfare  of  the  Midland 
counties  of  England,  and  to  express  adverse  opinion  freely — no 
doubt,  at  times,  in  language  more  vigorous  than  polite.  You 
may  be  told  that  this  antagonism  is  captious,  ignorant  and  per- 
sonal; but  I  will  content  myself  with  assuring  you  that  it  is,  and 
always  has  been,  wholly  disinterested  and  sincere.  Let  me  dismiss 
all  personal  aspects  of  the  question  as  promptly  as  possible  by 
pointing  out  that  they  cannot  affect  your  consideration  of  the 
"Smithsonian  System"  except  to  this  extent:  that  you  must  bear 
in  mind  when  listening  to  the  eloquence  of  my  friend  Mr.  E.  J. 
Smith,  that  he  is  not  the  disinterested  advocate  of  a  novel  prin- 
ciple in  the  science  of  political  economy,  but  the  defender  of  a 
plan  which  he  charges  large  fees  for  adapting  to  the  particular 
conditions  of  any  trade  that  may  invite  his  assistance.  He  draws 
£1,350  per  annum  as  chairman  of  the  Bedstead  Association, 
£500  per  annum  from  each  of  one  or  two  other  associations  over 
which  he  presides,  and,  less  than  twelve  months  ago,  he  demanded 
£3,500  for  establishing  an  association  in  the  Staffordshire  pot- 
tery trade.  I  am  credited  with  having  materially  assisted  in  pre- 
venting the  success  of  the  last-named  enterprise,  and,  consid- 
ering the  large  fee  involved,  no  one  need  blame  Mr.  Smith  for 
treating  me  as  a  most  irritating  and  vexatious  person. 

But  the  laborer  is  worthy  of  his  hire,  and  the  fact  that  Mr. 
Smith  charges  for  his  services  is  not,  per  se,  a  discredit  to  him 
or  an  argument  against  his  system.  If  the  system  is  good,  no 
payment  he  has  ever  received  can  be  regarded  as  excessive.  If, 

146 


as  I  believe,  the  system  is  bad,  it  is  perfectly  in  accordance  with 
one's  experience  of  human  nature  to  find  that  the  person  least 
ready  to  acknowledge  its  defects  is  the  man  whose  pocket  is  most 
favorably  affected  by  its  propagation. 

To  one  other  point  which  is  slightly  off  the  main  line  of  criti- 
cism, I  must  request  your  attention  at  the  outset  of  my  remarks. 
Every  department  of  British  commerce  and  industry  is  subject, 
more  or  less,  to  the  influences  of  our  free  trade  policy.  As  mere 
purchasers  all  our  people  have  the  advantage  of  abnormally  low 
prices,  and  our  working  classes  can  live  in  comparative  comfort 
upon  wages  which  would  scarcely  ward  off  starvation  if  high  pro- 
tective tariffs  barred  the  admission  of  plentiful  supplies  of  cheap 
food,  cheap  clothing,  and  all  other  necessaries  and  luxuries.  But, 
on  the  other  hand,  as  producers  and  sellers,  our  people,  under 
this  system  of  free  trade,  are  compelled  to  accept,  even  in  our 
home  markets,  the  prices  fixed  in  open  competition  with  rivals 
in  every  quarter  of  the  world.  Our  farmers  have  to  fight  against 
the  most  favored  wheat  growers  in  the  old  world  and  the  new; 
and  their  tiny  stockyards  are  pitted  against  the  huge  cattle  runs 
of  the  "Far  West,"  and  the  virgin  grazing  lands  of  Australasia. 
Our  manufacturers  and  artisans  must  adapt  profits  and  wages 
to  the  prices  at  which  the  underpaid  workers  of  Germany  and 
Belgium  can  flood  our  shops  with  their  wares;  and  the  surplus 
output  of  highly  specialized  and  perfectly  equipped  American 
factories  may  be  dumped  upon  our  shores  to  cut  out  or  cut  down 
the  home  producer  who  pays  high  taxes  because  the  state  has  little 
or  no  income  from  customs  duties. 

I  do  not  speak  either  as  a  protectionist  or  as  a  free  trader. 
What  I  have  said  is  merely  a  colorless  description  of  the  status 
quo.  But  it  will  be  perfectly  clear  to  you  that  a  country  which 
"buys  in  the  cheapest  markets"  must  produce  at  the  lowest  possi- 
ble cost  if  it  is  to  hold  its  own  against  external  rivalry.  It  must 
take  the  fullest  possible  advantage  of  the  cheap  labor  which  cheap 
living  creates,  and  it  cannot  afford  the  luxury  of  sentimental  the- 
ories. The  protective  policy  of  other  nations  gives  their  capital 
and  labor  a  solid  advantage  in  home  markets.  British  capital 
and  labor  have  to  compete  as  keenly  in  London,  Edinburgh  and 
Dublin,  as  in  New  York,  Paris  and  Berlin.  The  Smithsonian 
system  of  trades  combination  is  doomed  to  failure  as  a  British 
institution,  because  it  eliminates  the  free  competition  which  re- 
sults in  "bottom  prices,"  and  substitutes  inflated  and  wholly  arti- 
ficial rates  of  profit  and  of  wages.  In  a  protectionist  country  the 
system  might  flourish  in  any  trade  which  relied  wholly  or  mainly 
upon  the  home  markets,  but  even  under  such  specially  favorable 

147 


conditions  it  would  develop  peculiarities  against  which  it  is  neces- 
sary that  both  capital  and  labor  should  be  carefully  forewarned. 

The  Bedstead  Trade  Alliance  presents  the  best  illustration 
of  Mr.  E.  J.  Smith's  System.  Probably  mcst  of  you  are  familiar 
with  Consular  Report  No.  444,  issued  by  the  Bureau  of  Foreign 
Commerce,  Department  of  State,  Washington,  dated  June  6, 
1899,  and  signed  by  Mr.  Walter  T.  Griffin.  On  reading  this  re- 
port I  was  somewhat  surprised  to  find  that  it  consisted  in  the 
main  of  extracts  from  the  voluminous  writings  of  Mr.  Smith,  and 
that  Mr.  Griffin  had  adopted  the  rosh  st  views  of  the  system,  and 
endowed  them  with  all  the  weight  of  his  authority,  without  giv- 
ing to  American  readers  the  slightest  hint  that  there  is  another 
side  to  the  picture.  For  example,  I  notice  that  he  quotes  a 
speech  made  by  the  Eight  Hon.  Joseph  Chamberlain,  five  years 
ago,  when  the  whole  thing  was  in  an  experimental  stage.  Mr. 
E.  J.  Smith  was,  and  is^  one  of  Mr.  Chamberlain's  most  ardent 
political  supporters,  and  it  was  a  graceful  and  costless  recom- 
pense for  his  services  when  the  Right  Hon.  gentleman  advertised 
him  as  the  founder  of  "a  great  social  experiment."  But  I  should 
have  expected  Mr.  Griffin  to  point  out  that  the  results  have  not 
been  so  truly  marvelous  as  Mr.  Chamberlain  anticipated.  The 
Right  Hon.  gentleman  mentioned  a  great  trade  in  Bradford  which 
had  adopted  Mr.  Smith's  principles.  About  the  date  when  Mr. 
Griffin  was  ihaking  his  inquiries  for  Consular  Report  No.  444, 
Smith's  system  was  being  ingloriously  discarded  by  the  wool 
dyers  of  Bradford,  after  having  caused  unlimited  friction  and 
vexation  among  all  sections  of  the  woolen  trade.  I  am  some- 
what reluctant  to  characterize  as  nonsense  the  statement  on  page 
3  of  Mr.  Griffin's  report,  that  at  the  time  the  Bedstead  Associa- 
tion was  formed,  "No.  manufacturer  was  making  any  money, 
wages  were  at  the  starvation  point,"  etc.,  etc.  But  really  no 
milder  term  than  "nonsense"  can  be  applied  to  a  sweeping  and 
wholly  inaccurate  statement  which  seems  to  be  founded  entirely 
upon  the  irresponsible  chatter  in  which  my  good  friend  Mr. 
Smith  occasionally  indulges  when  he  beams  behind  the  smoke 
wreaths  of  a  fragrant  Havana. 

T  will  endeavor  to  give  you  a  somewhat  more  candid  history 
of  the  formation  of  the  Bedstead  Association.  In  the  early  '90s, 
British  trade  was  passing  through  a  period  of  extreme  depres- 
sion. The  causes  were  no  doubt  numerous,  but  low  prices,  which 
many  eminent  authorities  traced  to  the  appreciation  of  gold,  and 
the  fall  in  silver  values,  was  doubtless  the  main  factor  in  cramp- 
ing commercial  and  industrial  enterprise.  The  bedstead  trade 
had  its  full  share  in  the  depression,  and  while  the  old  established 

148 


and  wealthy  firms  were  doing  fairly  well,  taking  full  advantage 
of  the  plentiful  supply  of  cheap  labor  and  material,  men  with 
little  or  no  capital  behind  them  were  hard  pressed,  and  were 
recklessly  underselling  each  other  in  the  desperate  competition 
for  business.  As  in  every  other  trade  during  the  same  period, 
the  weakest  went  under,  while  the  stronger  survived.  Mr.  E.  J. 
Smith  is  a  self-made  man,  and  it  is  certainly  with  no  disrespectful 
thought  that  I  mention  the  fact,  well  known  to  me,  that  he  and  his 
partners  were  very  hard  pressed  during  that  crisis  in  their  trade, 
lie  set  himself  the  task  of  forming  an  association  to  prevent  ruin- 
ous underselling,  and  soon  induced  a  few  of  the  smaller  firms  to 
join  him  in  the  movement.  But  as  his  plans  developed,  he  was 
fortunate  in  gaining  the  support  of  Mr.  W.  J.  Davis,  a  very  able 
labor  leader  in  whom  the  workpeople  placed  absolute  confidence. 
At  this  early  stage  the  Bedstead  Association  consisted  of  a  com- 
paratively weak  minority  of  the  manufacturers,  but  Messrs.  Smith 
and  Davis  were  able  to  form  a  workman's  association,  which 
included  in  its  membership  practically  the  whole  of  the  opera- 
tives in  the  trade.  The  inducement  held  out  to  these  workmen 
was  an  immediate  advance  of  wages  in  the  form  of  a  10  per  cent 
bonus,  and  the  assurance  of  further  increases,  in  the  form  of 
additional  bonuses  upon  each  advance  made  in  selling  prices  by 
the  manufacturers.  No  great  expenditure  of  eloquence  was 
necessary  to  secure  the  cheerful  support  of  the  workpeople  to 
such  a  policy  as  this.  They  were  hearty  and  unanimous,  and 
when  they  agreed  to  work  only  for  firms  which  were  members  of 
Mr.  Smith's  manufacturers'  association,  !  he  founder  of  the  move- 
ment was  in  the  happy  position  of  being  able  to  compel  the  out- 
standing firms  to  join  him.  The  alternative  to  doing  so  \va-  I'M' 
withdrawal  of  their  work  people,  the  stoppage  of  their  business, 
and  the  transfer  of  prosperity  to  their  associated  rivals. 

In  point  of  fact,  the  bedstead  manufacturers,  who  desired 
to  retain  liberty  of  action,  treated  Mr.  Smith  as  a  person  of  no 
consequence,  until  they  suddenly  discovered  that  he  had  woven 
a  net  which  they  could  neither  break  nor  crawl  through,  and  they 
had  to  submit  to  being  caught  in  it  with  the  best  grace  possible. 
In  order  to  understand  the  undoubtedly  remarkable  success 
which  attended  his  efforts,  it  is  necessary  to  bear  in  mind  that 
Birmingham  was  the  home  of  the  bedstead  trade,  that  ten  years 
ago  it  had  practically  no  foreign  rivalry  to  contend  against,  and 
that  even  in  America  it  did  a  huge  trade,  and  was  able,  owing  to 
the  low  cost  of  production,  to  compete  pretty  fairly  with  the 
home  makers,  in  spite  of  protective  duties.  Conditions  such  as 
these  gave  wholly  exceptional  advantages  to  Mr.  Smith's  move- 

149 


rnent.  Broadly  speaking,  he  was  organizing  a  monopoly,  and  had 
little  or  nothing  to  fear  until  his  operations  created  the  inevitable 
competition.  During  the  first  year  or  two  of  its  existence  every 
member  of  the  association  was  delighted.  Large  profits  were 
made,  high  wages  were  drawn,  and  though  the  drastic  espionage 
organized  by  Mr.  Smith  might  provoke  an  occasional  adjective, 
there  was  no  serious  disposition  to  fight  against  the  master  and 
guiding  hand  of  the  skillful  originator  of  the  scheme. 

There  was  a  rift  within  the  lute  when  Mr.  Smith,  now  the 
handsomely  salaried  chairman  of  the  Bedstead  Association,  began 
to  sell  his  advice  to  the  manufacturers  of  bedstead  components. 
Tube  and  mount  manufacturers  and  workpeople  were  organized 
on  the  "Smithsonian"  principle,  and  of  course  raised  their  prices 
to  the  bedstead  makers,  who  soon  found  that  the  profits  Smith 
gave  with  one  hand  were  being  taken  away  by  Smith  with  the 
other.  He  comforted  them  with  further  advances,  but  the  process 
has  been  continuous,  and  at  the  present  time  selling  prices  and 
wages  in  the  bedstead  trade  are  nearly  double  what  they  were 
when  the  association  was  formed  seven  years  ago.  Outside  com- 
petition has  been  the  inevitable  consequence,  and  for  several  years 
past  the  Bedstead  Association  has  had  to  expend  enormous  sums 
in  fighting  this  kind  of  rivalry.  But  still  more  enervating  is  the 
constantly  increasing  tendency  to  hoodwink  the  association  by 
granting  secret  rebates  on  association  prices.  This  has  been  a 
thorny  subject  of  debate  and  recrimination,  the  more  so  as  it  is 
practically  impossible  to  prove  the  extent  to  which  the  system 
prevails ;  but  experienced  business  men  will  form  a  pretty  shrewd 
estimate  of  the  "palm  oil"  possibilities  in  a  business  where  free- 
dom of  competition  is  barred.  I  need  only  mention  that  a  few 
months  before  Mr.  Griffin  presented  his  report,  Mr.  John  Port, 
of  Manchester,  who  owns,  I  believe,  the  largest  bedstead  works 
out  of  Birmingham,  resigned  his  membership  of  the  association 
because  he  found  it  impossible  to  book  orders  at  list  prices,  owing 
to  the  extent  to  which  other  and  less  scrupulously  honest  firms 
were  giving  secret  rebates.  It  surprises  me  that  Mr.  Griffin  makes 
no  allusion  to  a  circumstance  of  so  much  importance. 

The  principle  of  a  Smithsonian  alliance  is  that  members  of  the 
manufacturers'  association  shall  employ  none  but  members  of 
the  workmen's  association,  and  that  workmen  shall  only  serve 
association  firms.  Mr.  E.  J.  Smith  has  frankly  admitted  that  the 
cornerstone  of  his  system  is  coercion,  and  he  maintains  that  with- 
out coercion  it  would  be  futile  and  inoperative.  His  candor  on 
this  important  point  is  exceedingly  helpful.  It  enables  me  to  go 
direct  to  the  all-important  question  of  whether  the  advantages 

150 


gained,  either  by  employers  or  workmen,  compensate  for  the  loss 
of  freedom  which  both  classes  suffer  when  they  adopt  his  system. 
I  will  take  as  illustration  the  case  of  Mr.  John  Port,  of  Manches- 
ter, who,  as  I  have  already  said,  withdrew  from  the  association 
early  this  year.  Like  every  other  member  of  the  association,  Mr. 
Port  was  one  of  the  fighting  fund  guarantors,  that  is  to  say,  he 
had  made  himself  responsible  to  the  association  bankers  for  a 
certain  amount,  which,  on  his  resignation,  was  used  for  coercing 
him.  This  coercion  took  the  form  of  calling  out  all  his  workmen, 
the  strike  pay  and  allowance  to  pickets  being  drawn  from  the 
fighting  fund.  At  the  same  time  the  association  made  every  pos- 
sible effort  to  prevent  firms  which  have  dealings  with  the  bed- 
stead trade  supplying  Mr.  Port  with  materials,  and  powerful  in- 
fluences were  brought  to  bear  to  prevent  him  selling  any  of  his 
goods  to  the  wholesale  or  retail  houses.  Practically  the  strike 
is  still  going  on,  but  the  coercive  tactics  of  the  association  failed. 
Several  independent  firms  of  bedstead  makers  supplied  Mr.  Port 
with  goods  to  meet  the  requirements  of  his  customers,  the  cus- 
tomers stood  by  him,  and  in  the  course  of  a  few  weeks  he  was  able 
to  fill  up  most  of  the  vacant  places  in  his  factory  with  free  work- 
men drawn  from  other  trades.  When  the  success  of  Mr.  Port's 
revolt  was  assured,  Mr.  William  Eobinson,  of  Northbrook  street, 
Birmingham,  retired,  and  again  the  policy  of  calling  out  all  the 
alliance  workmen  was  adopted,  but  this  rebel  has  also  succeeded 
in  defying  Mr.  E.  J.  Smith  and  his  system.  An  even  more  im- 
portant defection  was  that  of  Messrs.  Perry  and  Sons,  of  Bilston, 
near  Birmingham.  The  Eight  Hon.  Sir  Henry  Fowler,  M.P., 
is  a  director  of  this  firm,  which  withdrew  because  its  heads  were 
convinced  that  the  coercive  policy  practiced  under  Mr.  Smith's 
direction  amounts  to  illegal  conspiracy  at  common  law.  Sir 
Henry  Fowler  is  a  distinguished  lawyer,  and  no  doubt  his  fellow 
directors  had  the  benefit  of  his  advice.  Messrs.  Perry's  work- 
people signed  an  agreement  and  severed  their  connection  with  the 
workmen's  section  of  the  alliance. 

The  condition  of  several  other  combinations  with  which  Mr. 
Smith  is  connected,  such  as  the  coffin  furniture,  the  fender  and 
fire  brasses,  and  the  jet  and  rockingham,  is  far  from  flourishing, 
and  defections  are  frequent.  I  have  already  alluded  to  the  col- 
lapse of  the  Bradford  Wool  Dyers'  Association,  to  Mr.  Smith's 
failure  in  the  pottery  trade,  and  may  add  that  the  Welsh  tinplate 
trade,  after  listening  to  his  eloquence,  declined  to  adopt  his  plans. 
The  blue  brick  manufacturers,  and  the  bar  iron  makers,  who  have 
had  ample  opportunities  of  seeing  his  system  in  operation,  have 
also  refused  to  have  anything  to  rlo  with  it.  Last  year  the  ordi- 

151 


nary  working  expenses  of  the  Bedstead  Association  exceeded  i 7,- 
000.  This  year  special  fighting  levies  amounting  to  over  £12,000 
have  been  made  in  addition  to  the  ordinary  expense  levies.  A 
great  many  of  the  members  are  in  arrears  with  these  levies,  and 
the  number  of  outside  firms  has  increased,  while  the  authority 
of  the  association  officials  is  fatally  injured  by  their  failure  to 
successfully  coerce  Messrs.  John  Port,  Wm.  Kobinson,  Perry  and 
Sons,  and  some  London  and  Glasgow  outside  firms,  against  whom 
a  policy  of  selling  at  less  than  cost  price  was  adopted  a  year  ago. 

You  will  see  from  this  hurried  summary  of  the  present  posi- 
tion of  Smithsonian  combinations  that  Mr.  Walter  T.  Griffin  has 
not  said  all  that  may  be  necessary  to  an  intelligent  appreciation 
of  the  position  in  Consular  Keport  ISTo.  444.  I  do  not  suppose 
that  Mr.  Smith  will  supplement  the  deficiencies,  and  I  have  no 
right  to  ask  that  you  should  place  implicit  faith  in  the  statement? 
I  have  made,  though  they  are  a  mere  summary  of  unchallenged 
news  items  which  have  appeared  in  the  British  press  during  the 
past  twelve  months.  But  you  will  permit  me  to  suggest  that 
before  accepting  Mr.  E.  J.  Smith's  system  as  a  solution  of  the 
complex  problem  of  how  best  to  reconcile  the  interests  of  capital 
and  labor,  your  great  conference  should  direct  a  careful  and  inde- 
pendent inquiry  to  be  made  by  capable  and  independent  indus- 
trial experts,  to  whom  I  shall  be  most  willing  to  give  all  the  assist- 
ance that  lies  in  my  power. 

In  addressing  an  audience  of  employers  on  this  subject,  I 
should  have  to  point  out  that  those  capitalists  who  adopt  the 
"Smithsonian"  system,  imperil  not  only  their  freedom,  but  their 
trade.  They  lose  their  freedom  and  independence,  because  what 
Mr.  Smith  is  pleased  to  call  "scientific  cost  taking"  compels  n 
manufacturer  to  disclose  every  detail  of  his  business  to  trade 
rivals,  and  the  system  of  espionage,  which  Mr.  Smith  draws  a 
salary  of  £1,350  a  year  for  supervising  in  the  bedstead  trade.  i= 
so  close  that  the  most  private  papers  and  books  relating  to  one's 
business  must  be  opened  to  the  association  agent  on  demand. 
For  every  fault  of  omission  or  commission,  a  fine  may  be  imposed, 
and  woe  to  the  man  who  happens  to  be  out  of  favor  with  the  gov- 
erning and  favored  clique  which  invariably  grows  up  under  such 
an  organization.  The  records  of  the  limited  companies  engaged 
in  the  bedstead  trade  show  that  the  profits  do  not  exceed  on  the 
average  7  per  cent.  And  the  volume  of  trade,  even  at  this  small 
profit,  is  restricted,  because  the  high  prices  created  by  pamper- 
ing the  workmen  have  encouraged  the  establishment  of  bedstead 
manufactories  in  Germany,  in  France,  in  Belgium,  in  Holland, 
and  even  in  decadent  and  degenerate  Spain,  while  on  the  Ameri- 


can  continent  they  have  placed  the  British  trader  at  a  hopeless 
disadvantage.  If  any  member  of  a  Smithsonian  combination 
finds  that  its  control  does  not  favor  his  welfare,  he  can  only  gain 
his  liberty  by  making  a  large  pecuniary  sacrifice,  with  the  galling 
certainty  that  his  own  money  as  well  as  that  of  fellow  traders  will 
be  freely  spent  in  a  resolute  endeavor  to  ruin  him;  and  ruined 
he  certainly  will  be  if  his  purse  is  not  abnormally  long,  his  perse- 
verance great,  and  his  enemies  comparatively  weak.  The  suc- 
cessful revolt  of  Messrs.  Port,  Eobinson,  and  Perry  &  Sons,  marks 
the  decay  of  the  Bedstead  Alliance,  but  in  its  palmy  days  it  ruined 
several  men  who  fought  for  liberty  and  gloried  in  sending  one, 
at  least,  to  a  premature  grave.  I  do  not  hesitate  to  say  that, 
though  the  system  may  be  a  crutch  to  limping  incapacity,  it  is  a 
fetter  to  any  man  of  vigor,  enterprise,  and  ability.  But  even  the 
ablest  may  be  drawn  into  a  sacrifice  of  their  freedom  without  fully 
realizing  what  they  do,  and  when  the  chains  are  welded  a  Hercules 
may  be  required  to  break  them. 

Those  who  noted  carefully  the  description  I  have  given  of 
Mr.  Smith's  first  essay  in  combination  forming  may  have  re- 
marked that  he  triumphed  rather  as  an  organizer  of  labor  than 
of  capital.  He  paid  well  for  the  support  of  the  workingmen,  and 
having  induced  them  to  act  as  his  coercionists,  "the  persuasion" 
of  the  employers  followed  in  due  course.  It  would  be  wholly 
unreasonable  to  blame  the  workmen  for  taking  the  course  they 
did.  Most  of  them  live  from  hand  to  mouth,  and  trouble  very 
little  about  principles  of  political  economv.  Besides,  it  has  always 
been  quite  clear  that  next  to  the  founder  himself,  they  gained 
the  lion's  share  of  advantage  from  Mr.  Smith's  system.  Their 
wages  were  raised  at  once,  and  have  been  rising  steadily  ever  since, 
though  frequently  the  gain  has  been  rather  nominal  than  real,  in 
consequence  of  the  scarcity  of  employment.  It  is  perfectly  true 
that  since  the  alliance  was  formed,  workingmen  have  experienced 
far  greater  difficulty  in  becoming  employers,  but  this  is  not  a  con- 
sideration that  carries  much  weight  with  the  majority,  who  are 
apt  to  say,  and  not,  I  think,  without  some  reason,  that  the  worst 
masters  are  the  smallest.  On  the  other  hand,  the  alliance  rules 
provided  that  the  bulk  of  strike  pay  should  be  found  by  the  em- 
ployers* a  novel  and  agreeable  experience  to  trade  unionists;  and 
when  called  out  for  coercive  purposes  the  men  were  assured  of  an 
allowance  equal  to  their  wages,  and  had  merely  to  do  a  little 
picket  duty  in  return.  Seven  years'  experience  has  somewhat 
dimmed  the  brightness  of  the  prospect  held  out,  yet  I  think  the 
fact  is  undeniable  that  a  majority  of  the  workmen  consider  that 
they  acted  wisely  in  giving  their  support  to  Mr.  Smith. 

153 


But  in  spite  of  this  I  would  venture  to  appeal  to  the  intelli- 
gence of  any  well  organized  body  of  workingmen,  either  in  my 
own  country  or  in  America,  for  a  vote  against  the  principle  of 
alliance  with  which  Mr.  E.  J.  Smith's  name  is  associated.  Seven 
years'  experience  has  not  heen  without  its  lessons  to  those  who  are 
willing  to  learn.  It  is  now  the  opinion  of  a  good  many  workmen 
that  they  degrade  themselves  hy  consenting  to  act  as  mere  tools  of 
coercion  for  an  employers'  organization  against  masters  with 
whom,  personally,  they  have  no  quarrel.  Some  of  Mr.  John  Port's 
workpeople  had  been  in  his  service  for  thirty  years,  and  when  he 
retired  from  the  Bedstead  Association  it  was  a  pathetic  thing  to 
see  these  old  hands  parting  with  a  kindly  employer  who  was  quite 
willing  to  continue  paying  the  association  rate  of  wages,  though 
he  could  no  longer  submit  to  the  association  rules  and  restraints. 
But  the  more  serious  aspect  of  the  matter  from  a  trade  union 
point  of  view  is  that  the  slightest  failure  of  the  coercive  system 
is  quite  as  fatal  to  the  Workman's  Union  as  to  the  Employers' 
Association.  Take  the  case  of  the  three  firms  which  have  recently 
broken  away  from  the  Bedstead  Association.  Every  trade  union- 
ist has  been  drawn  away  from  these  firms  by  order  of  Mr.  E.  J. 
Smith  and  his  committee.  But  the  firms  have  not  closed  their 
doors.  They  have  simply  drawn  in  skilled  workmen  thrown  idle 
through  depression  in  the  cycle  trade  and  similar  industries,  and 
are  rapidly  converting  them  into  efficient  bedstead  hands.  The 
men  these  firms  formerly  employed  are  thrown  upon  the  alliance, 
which  must  either  pay  them  for  doing  nothing  or  give  them  a 
share  of  the  work  available  in  alliance  factories.  Every  outsider 
who  starts  a  bedstead  business  (and  the  number  is  already  con- 
siderable), and  every  defaulter  from  the  association  must  train 
men  to  the  business,  and  in  due  course  these  men  become  the 
rivals  of  union  workmen.  To  admit  them  to  the  union  would  be 
fatal  weakness;  to  leave  them  outside  makes  opposition  to  the 
alliance  more  easy.  The  tendency,  therefore,  is  to  develop  two 
rival  sections  of  workpeople,  alliance  and  non-alliance,  between 
whom,  I  suspect, there  will  be  hatred,  malice,  and  all  uncharitable- 
ness,  even  when  Mr.  E.  J.  Smith  has  ceased  to  be  a  force  in  the 
industrial  affairs  of  Mid-England.  I  doubt  very  much  whether 
it  will  be  possible  to  make  workpeople  risk  these  schisms  in  the 
ranks  of  labor,  or  sacrifice  their  independence  for  such  advan- 
tages as  the  Smithsonian  system  has  to  offer.  They  will  prefer 
to  rely  upon  independent  organizations,  capable  of  dictating  their 
own  terms,  and  free  to  accept  service  under  any  employer  by 
whom  these  terms  are  granted.  The  very  limited  success  of  this 

154 


combination  system  is  due  far  more  to  peculiar  and  strictly  local 
conditions  than  to  any  special  virtues  of  its  own. 

It  seems  hardly  necessary  to  point  out,  after  what  has  already 
been  said,  that  as  a  means  of  preventing  trade  disputes  the  Smith- 
sonian system  is  a  dismal  failure.  Strikes  are  as  frequent  as  be- 
fore, and  capital  not  only  pays  excessive  wages  to  prevent  them, 
but  has  to  support  the  workpeople  while  they  are  in  progress.  If 
one  grants  that  "ruinous  underselling"  has  been  checked,  it  is  at 
once  possible  to  retort  that  this  is  only  done  while  outside  com- 
petition and  rivalry  are  undeveloped,  and  that  within  the  last 
twelve  months  the  Bedstead  Association  has  sacrificed  thousands 
of  pounds  in  an  attempt  to  crush  opposition  by  selling  under  cost 
price.  Though  fashion  on  the  continent  of  Europe  has  set  strong- 
ly in  favor  of  metallic  bedsteads  since  the  alliance  was  formed, 
there  is  no  responsive  increase  in  this  branch  of  Birmingham 
trade,  and  within  the  year  it  was  officially  reported  that  half  the 
workpeople  were  on  short  time.  These  are  hard  facts,  which  no 
amount  of  grandiloquent  palaver  can  dissipate,  and  they  are  not 
what  one  would  look  for  in  the  records  of  a  "triumphant  solution" 
of  the  industrial  problem.  It  is  also  a  hard  fact  that  one  Birming- 
ham firm  has  transferred  a  considerable  section  of  its  plant  to 
Spain,  and  that  another  is  building  a  factory  at  Antwerp — in 
both  cases  with  the  object  of  escaping  from  alliance  discipline. 

The  cardinal  defect  of  Mr.  Smith's  system  is  that,  unlike  a 
trust,  or  an  actual  combination  of <  works  and  capital,  it  effects 
no  saving  in  any  direction  whatever.  Not  one  solitary  feature 
of  it  is  economic.  There  is  no  saving  in  designing,  in  advertis- 
ing, in  order  collecting,  or  in  transport.  No  inducements  what- 
ever are  offered  to  the  workpeople  to  cheapen  the  cost  of  produc- 
tion by  exceptional  skill  or  industry.  The  employers  are  simply 
bound  to  pay  workpeople  50  per  cent  more  than  they  would  be  con- 
tent with  if  no  alliance  existed ;  they  have  to  subscribe  to  the  sal- 
ary of  a  chairman  who  does  not  allow  them  to  call  their  souls  their 
own;  they  have  to  give  bank  guarantees  which  will  be  drawn  upon 
for  their  destruction  if  they  claim  liberty  of  action ;  they  are  fined 
like  naughty  boys  if  they  make  a  mistake,  or  happen  to  be  caught 
in  giving  a  rebate  which  they  know  perfectly  well  is  allowed 
sub-rosa  by  nine-tenths  of  their  rivals  in  trade.  They  may  at  any 
time  be  called  upon  to  subscribe  their  quota  to  the  coercion  of  an 
honorable  fellow  trader.  They  may  see  splendid  openings  for 
enterprise,  but  if  they  move  a  hair's  breadth  from  the  beaten 
track,  the  lynx-eyed  scientific  cost-taker  and  his  emergency  com- 
mittee of  rival  traders  will  be  smelling  round  in  a  most  inquiring 
frame  of  mind.  The  whole  system  savors  of  the  ridiculous,  and 

156 


I  have  marveled  many  times  that  my  fellow-townsmen  could  tol- 
erate the  irksome  espionage,  or  submit  to  the  dictation  of  its 
designer,  but  they  know  how  assiduously  and  how  skillfully  he 
has  purchased  the  favor  of  the  operatives  section,  and  only  the 
wealthiest  and  the  most  resolute  will  try  a  fall  with  him.  In  a 
word,  the  Alpha  and  Omega  of  the  Smithsonian  system  is  Mr. 
E.  J.  Smith,  and  I  am  one  of  his  most  dispassionate  admirers. 
Bemove  him,  and  the  system  would  collapse  like  a  castle  of  cards. 
I  cannot  hope  to  have  carried  conviction  to  all  your  minds  by 
the  somewhat  disjointed  comments  in  this  brief  and  hastily  pre- 
pared paper,  and  must  be  content  if  it  has  given  pause  to  some 
who  were  carried  away  by  the  curiously  one-sided  and  inadequate 
view  of  Mr.  E.  J.  Smith's  system,  which  has  obtained  official  cur- 
rency in  the  United  States.  The  subject  is  worthy  of  far  more 
careful  and  exhaustive  examination  than  I  ha?e  been  able  to  pre- 
pare in  the  time  at  my  disposal,  but  I  may,  at  least,  take  comfort 
in  the  thought  that  you  cannot  scorn  this  criticism  without  con- 
ferring a  benefit  upon  the  commerce  of  my  country! 

Joseph  Nimmo,  Jr. — "The  Limitation  of  Competition  and 
Combination  as  Illustrated  in  the  Kegulation  of  Eailroads": 

JOSEPH  NIMMO,  JE. 

President  National  Statistical  Association. 

In  its  essential  features  the  important  question  of  public  pol- 
icy which  we  are  here  to  discuss  is  almost  as  old  as  the  history 
of  human  government.  It  is  the  ever  recurring  question  as  to  the 
manner  in  which  and  the  extent  to  which  combination  and  ag- 
gregated capital  may  beneficially  and  without  detriment  to  the 
public  interests,  operate  in  restraint  of  competition.  The  dis- 
cussion of  a  question  so  comprehensive  and  so  radical  inevitably 
touches  upon  the  elementary. 

The  only  universal  laws  of  which  we  have  knowledge  are  the 
laws  of  the  Creator.  No  statute  of  His  conflicts  with  another. 
Divine  law  is,  in  and  of  itself,  the  manifestation  of  an  omniscient, 
omnipotent,  and  omnipresent  Euler.  Absolute  perfection  char- 
acterizes His  law.  The  laws  of  human  society,  on  the  other  hand, 
are  marked  by  the  infirmities  which  attach  to  a  world  ruled  by 
man  and  his  passions.  Humanum  est  errare.  Human  laws  con- 
flict with  each  other  in  innumerable  ways,  and  hence  are  subject 
to  restraints  and  limitations.  The  science  of  government  and  of 
huiimn  law  is  essentially  a  science  of  limitations.  Every  funda- 


mental  principle  of  government,  every  established  rule  of  public 
policy  and  every  wholesome  statutory  enactment  must  in  prac- 
tical administration  be  taken  in  connection  with  its  qualifying 
conditions  and  limitations.  Besides,  inventions,  newly  discov- 
ered forces,  and  ever  changing  conditions  necessitate  changes  in 
those  rules  of  action  which  preserve  the  harmonious  course  of 
human  interaction.  This  status  of  unstable  equilibrium  and  of 
limitation  and  restraint  is  inevitable  from  the  fact  that  in  all  our 
social  and  industrial  pursuits  we  are  actuated  by  two  opposing 
motives.  Individuality  leads  men  to  struggle  with  their  fellows 
for  the  acquisition  of  everything  worth  having  and  holding,  for 
we  live  in  a  world  in  which  we  are  all  debating.  On  the  other 
hand,  an  equally  virile  human  trait, — the  social  instinct, — leads 
men  to  associate  themselves  together  in  co-operative  enterprise. 
Since  the  world  began  man's  faith  in  his  fellow-man  was  never 
before  so  pronounced  as  it  is  to-day.  This  is  manifested  in  in- 
numerdble  forms  of  social  and  industrial  association.  Out  of 
these  opposing  forces  has  sprung  the  habit  of  competition  and 
the  habit  of  combination.  The  struggle  between  these  conflicting 
dispositions  has  begotten  two  maxims,  namely,  "Competition  is 
the  life  of  trade,"  and  "In  Union  there  is  strength."  Neither  of 
these  maxims  affords  a  safe  guide  in  the  affairs  of  life.  In  many 
instances  competition  kills  trade  by  constriction.  There  are  also 
combinations  for  gc-od  and  combinations  for  evil.  Many  com- 
binations perish  of  their  own  weight  and  lack  of  vitality.  Be- 
sides, the  life  of  trade  is  a  subjective  element.  It  has  its  origin 
and  force  in  human  intelligence,  ambition  and  acquisitiveness. 
Combination  and  competition  are  only  modes  of  interaction. 
They  dre  mutually  regulative  of  each  other.  Together  they 
operate  as  the  balance  wheel  of  self-government.  The  question 
before  us  is,  therefore,  one  of  differentiation,  selection,  and  adap- 
tation. 

If,  then,  goverh'inental  institutions,  laws,  and  rules  of  public 
policy,  arid  even  shrewdly  devised  maxims  conflict  and  are  all 
subject  to  limitations  and  restraints,  is  humanity  adrift  in  its 
social,  cdmmercial,  and  industrial  interaction?  The  answer  is 
clear  and  sufficient  to  every  reflecting  mind.  The  peace  and  well 
being  of  human  society  proceed  from  laws,  policies  and  institu- 
tions which  experience  has  proved  to  be  for  the  common  good 
of  all.  Out  of  the  lessons  taught  by  centuries  and  even  millenni- 
ums of  experiment  and  struggle,  there  have  been  evolved  those 
customs  and  usages,  those  beneficent  principles  of  government, 
those  rules  of  piiblic  policy,  those  wholesome  systems  of  law,  those 
judicial  discriminations  and  those  habits  to  which  in  their 

157 


entirety  we  apply  the  generic  term  civilization.  The  world  bows 
to  the  edicts  of  its  own  experiential  knowledge.  Said  Patrick 
Henry  in  his  immortal  oration  for  liberty :  "I  have  but  one  lamp 
by  which  my  feet  are  guided,  and  that  is  the  lamp  of  experience. 
I  know  of  no  way  of  judging  the  future  but  by  the  past."  The- 
ories built  upon  accepted  laws  of  human  experience  are  to  a  degree 
useful,  but  the  idea  of  natural  or  universal  law,  other  than  moral 
law,  is  a  solecism  in  the  affairs  of  men. 

In  the  excitement  attending  every  epochal  period  and  every 
popular  movement  for  the  correction  of  real  or  fancied  evils  rem- 
edies essentially  revolutionary  and  destructivs  in  character  are 
apt  to  be  proposed.  Such  will  inevitably  be  the.  case  now  as 
attempts  are  being  made  to  settle  that  great  question  the  con- 
sideration of  which  has  called  together  from  all  parts  of  the 
United  States  this  convocation  of  men  of  learning  and  of  large 
practical  experience. 

The  fundamental  error  which  usually  confronts  such  efforts 
arises  from  the  propensity  toward  doctrinarianism.  It  is  one  of 
Kenan's  profound  sayings  that  the  nation  which  devotes  itself  to 
social  problems  is  a  lost  nation.  That  is  undoubtedly  true  in  so 
far  as  relates  to  attempts  to  formulate  universal  law.  The  science 
of  law  as  evolved  by  the  lessons  of  experience  is  the  finest  soci- 
ology. 

The  specific  question  presented  for  our  consideration  is  that 
of  "Trusts,"  as  the  word  by  a  process  of  misuse  has  come  to  have 
significance  in  the  public  mind.  The  real  issue  relates  to  the 
manner  in  which  and  the  extent  to  which  the  recent  movement 
toward  the  restraint  of  competition  through  combination  or 
through  the  power  of  aggregated  capital  should  be  limited  or  con- 
trolled by  governmental  authority.  This  question  presents  itself 
in  innumerable  forms,  for  there  are  many  kinds  of  combination?, 
agreements  and  co-operative  arrangements  differing  widely  in 
character  and  in  their  constraining  influence  upon  competition. 

Again,  it  is  a  matter  of  vital  importance  to  determine  the 
question  as  to  the  nature  and  extent  of  proper  governmental  in- 
terference in  the  social,  commercial,  and  industrial  operations  of 
the  people.  The  love  of  liberty  begotten  of  the  circumstances 
attending  the  immigration  of  our  forefathers  to  these  shores,  their 
colonial  experiences,  and  the  struggles  which  terminated  in  .na- 
tional existence  led  them  to  establish  upon  this  Continent  a  sys- 
tem of  government  based  upon  the  idea  of  the  smallest  possible 
interference  with  the  commercial  and  industrial  affairs  of  the 
people.  Our  whole  theory  of  government  is  founded  upon  faith 
in  the  conservatism  which  inheres  in  the  untrammeled  interac- 

168 


tiun  of  forces,  a  faith  expressed  in  the  motto  "In  God  we  trust/' 
This  faith  was  the  guiding  star  of  all  their  conceptions  of  self- 
government.  Thomas  Jefferson  was  the  most  conspicuous  apostle 
of  that  faith.  In  his  first  annual  message  to  Congress  as  Presi- 
dent he  said,  "Agriculture,  manufactures,  commerce  and  navi- 
gation, the  four  pillars  of  our  national  prosperity,  are  the  most 
thriving  when  left  most  free  to  individual  enterprise."  The  pol- 
icy thus  commended  has  with  few  departures  been  the  guide  of 
our  national  legislation  and  it  may  be  regarded  as  the  settled 
policy  of  the  country. 

New  forces  now  assert  themselves  and  new  conditions  con- 
front us.  Hence  the  old  problems  concerning  the  regulation  of 
competition  through  combination  and  of  governmental  restraints 
upon  combination  present  themselves  under  new  conditions. 
The  task  which  devolves  upon  the  man  of  the  present  generation 
is  to  solve  those  problems,  at  least  for  our  own  time,  upon  ap- 
proved principles  of  justice  and  of  sound  public  policy,  and  in 
such  manner  as  not  to  disturb  the  sure  foundations  upon  which 
our  civilization  and  our  governmental  system  rests.  The  whole 
question,  as  I  view  it,  relates  to  the  limitations  which  should  be 
imposed  upon  both  competition  and  combination  by  the  people 
themselves  in  the  course  of  their  own  interaction  and  through 
beneficent  governmental  regulation  justified  by  the  lessons  of 
experience.  The  subject  runs  into  almost  illimitable  detail.  The 
question  as  it  touches  each  industry  and  occupation  must  be 
judged  upon  its  particular  governing  facts  and  conditions.  It 
appears  to  me  that  the  proper  way  to  conduct  the  inquiry  is  for 
each  debater  to  consider  and  discuss  the  merits  of  the  particular 
phase  of  the  question  to  which  he  has  devoted  his  best  efforts  as 
student,  or  in  the  course  of  his  business  experiences.  In  view  of 
the  fact  that  my  business  life  began  as  civil  engineer  in  the  con- 
struction of  railroads,  was  continued  as  officer  of  the  national 
government  charged  with  the  duty  of  investigating  and  report- 
ing upon  matters  relating  to  commerce  and  transportation,  and 
latterly  has  related  to  my  professional  work  as  statistician  and 
economist,  it  appears  proper  that  on  this  occasion  I  should  invite 
your  attention  to  the  American  Eailway  System, — its  evolution, 
the  stages  of  its  development,  its  efficiency,  and  the  evolved  law 
of  its  being. 

The  manner  in  which,  and  the  extent  to  which,  competition 
has  been  operative  in  the  course  of  the  development  of  railroad 
transportation  in  this  country,  are  indicated  by  leading  facts  in 
the  history  of  the  evolution  of  the  American  railroad  system. 
Such  facts  also  indicate  the  manner  in  which  and  the  extent  to 

159 


which  railroad  combination  has  been  created  by  the  interaction  of 
commercial  and  industrial  forces  and  by  the  exigencies  of  railroad 
management. 

The  year  1830  very  nearly  marks  the  genesis  of  railroad  trans- 
portation in  {he  United  States  and  England.  It  was  evident  at 
the  very  beginning  that  in  so  far  as  relates  to  carriers  it  is  impos- 
sible to  apply  the  time-honored  rules  of  the  free  highway  to  an 
avenue  of  commerce  whose  pathway  is  no  wider  than  the  wheel 
of  the  vehicle  which  moves  upon  it.  It  also  became  apparent 
that  considerations  of  economy,  of  safety,  and  of  commercial 
efficiency  require  that  the  entire  railroad  establishment,  includ- 
ing roadway  and  equipment,  must  be  placed  under  one  central 
ownership  and  control,  and  that  the  management  of  the  traffic 
interests  of  each  railroad  must  be  subjected  to  the  same  central 
authority.  This  gave  to  railroads  at  the  very  beginning  a  de- 
cided but  absolutely  unavoidable  aspect  of  monopoly.  Precon- 
ceived ideas  in  regard  to  the  freedom  of  the  highway  at  first 
caused  the  civilized  world  to  be  amazed  at  this  conclusion.  In 
order  to  meet  public  prejudices  it  was  proposed  that  railroad 
transportation  should  be  made  a  public  function.  The  experi- 
ment of  state  ownership  and  management  was  tried  in  this  coun- 
try under  conditions  much  simpler  and  much  more  favorable  to 
success  than  those  which  exist  to-day.  Six  states  of  the  Union 
attempted  the  experiment,  namely,  the  states  of  Massachusetts, 
Michigan,  Pennsylvania,  Illinois,  Indiana  and  Georgia.  Each 
one  of  these  experiments  resulted  in  absolute  failure,  and  for  a 
period  of  about  sixty  years  the  people  of  this  country  have 
acquiesced  in  railroad  corporate  management  and  control.  The 
results  of  this  system  have  been  grand  beyond  the  dreams  of  even 
the  most  sanguine  railroad  projector.  There  have  been  con- 
structed in  this  country  247,532  miles  of  railroad  track.  More 
than  half  a  continent  has  been  reclaimed  from  a  wilderness,  the 
habitation  of  wild  beasts  and  of  savages  and  converted  into  homes 
of  an  enlightened  and  progressive  people  mainly  through  the 
facilities  of  transportation  afforded  by  railroads.  An  internal 
commerce  has  been  built  up,  the  value  of  which  is  twenty  times 
that  of  our  foreign  commerce.  The  facilities  of  direct  trade  to 
the  remotest  parts  of  this  country  have  been  provided  for.  Con- 
stant improvements  in  the  mechanical  features  of  roadway  and 
equipment,  increased  facilities,  advanced  methods  of  administra- 
tion and  innumerable  and  ingeniously  devised  economies  have  so 
reduced  the  cost  of  transportation  in  this  country  that  the  aver- 
age rate  by  rail  is  to-day  only  about  one-third  what  it  was  even 
thirty  years  ago. 

160 


This  enormous  accretion  to  the  world's  commerce  and  this 
wonderful  reduction  in  the  cost  of  internal  transportation  have 
resulted  in  an  ever  tightening  grasp  of  competition  in  all  the 
productive  industries.  Besides  there  has  been  an  uncontrollable 
and  ever-quickening  tendency  toward  a  parity  of  values  in  all 
parts  of  the  country.  This  in  turn  has  become  the  most  coer- 
cive cause  of  the  reduction  in  transportation  charges.  Instead 
therefore  of  restricting  competition,  as  at  the  beginning  was 
feared  might  be  the  result  of  a  railroad  system  of  transportation 
under  corporate  ownership  and  control,  the  actual  result  has  been 
a  fiercer  and  a  vastly  more  extended  and  potential  competition 
than  the  world  had  ever  before  seen.  The  competition  thus  cre- 
ated is  between  rival  towns  and  cities  between  different  sections 
of  the  country,  and  between  mines  and  manufactures  and  mar- 
kets. Such  competition  for  its  intensity  and  the  extent  of  its 
potentialities  is  unprecedented  in  history.  Ever  improving 
facilities,  economies  and  administrative  measures  have  so  reduced 
the  time  and  charges  of  transportation  by  rail  as  largely  to  divert 
commerce  from  competing  water  lines. 

From  the  year  1830,  until  about  the  year  1850  each  railroad 
in  the  United  States  was,  as  a  rule,  operated  independently  of  all 
other  railroads.  Different  track  gauges  were  adopted  in  many 
instances  for  the  express  purpose  of  preventing  "the  carriage  of 
freights  from  being,  and  being  treated  as  one  continuous  carriage 
from  the  place  of  shipment  to  the  place  of  destination,"  a  prac- 
tice now  interdicted  by  the  interstate  commerce  act  as  a  public 
offense.  (See  Act  to  Regulate  Commerce,  Section  7.) 

But  a  great  change  came.  The  social,  commercial  and  postal 
necessities  of  the  age,  and  the  military  exigencies  of  the  late  Civil 
War  rapidly  brushed  aside  all  obstacles  to  the  formation  of  that 
great  American  railroad  system  which  is  to-day  unto  the  traveler 
and  the  shipper  as  one  instrumentality  of  transportation,  embrac- 
ing 247,532  miles  of  track,  administered  and  operated  as  though 
by  one  central  authority.  This  wonderful  organic  unity  embraces 
connected  rails,  a  common  track  gauge,  union  depots,  joint  rates, 
the  uniform  classification  of  commodities,  rate  agreements  of 
various  sorts,  through  tickets,  related  time  schedules,  the  unim- 
peded passage  of  freight,  passenger,  express  and  postal  cars  and 
locomotives  over  the  tracks  of  different  companies,  and  to  a  con- 
siderable extent  the  employment  of  operatives  in  the  pay  of  one 
company,  upon  the  lines  of  other  companies.  Each  company  has 
thus  become,  in  many  ways,  the  agent  of  other  companies. 

This  practical  unification  of  the  great  work  of  transporta- 
tion by  rail  came  about  not  as  the  result  of  design  or 

161 


forecast  on  the  part  of  the  companies,  but  as  the  outcome  of  an 
evolution  responsive  to  the  demands  of  the  public  interests. 
Objections  to  the  juncture  of  lines  and  the  combination  of  traffic 
interests  which  at  first  appeared  insuperable  were  swept  aside  by 
an  imperious  force  of  circumstance.  At  last  a  consensus  of  the 
social,  political  and  commercial  forces  of  the  country  led  to  a 
statutory  enactment  by  the  national  government  which  ratified 
the  combination  of  railroad  interests  just  described.  I  refer  to 
the  act  of  Congress  approved  June  15, 1866. 

In  view  of  the  foregoing  the  historic  fact  stands  out  indisput- 
ably that  the  firmly  united  and  deftly  articulated  American  rail- 
road system  had  its  origin  in  acknowledged  public  needs  and  in  a 
coercive  public  sentiment  which  remains  unchanged  to  this  day. 
It  is  a  form  of  combination  which  subserves  the  interests  of  every 
person  on  this  continent  and  it  is  prejudicial  to  the  interests  of 
none. 

In  the  course  of  time,  this  extension  of  the  facilities  of  joint 
railroad  traffic  placed  the  companies  under  a  stress  of  competition 
and  begat  administrative  difficulties  which  for  years  threatened 
the  financial  existence  of  every  railroad  corporation  in  the  coun- 
try. It  also  demoralized  commerce.  This  was  the  inevitable 
outcome  of  a  great  organic  unity  lacking  the  means  of  administra- 
tive control.  The  situation,  for  years,  was  described  by  the  late 
Albert  Fink  as  follows : 

"The  stockholders,  in  the  first  place,  surrender  their  control 
to  a  board  of  directors,  the  board  of  directors  surrender  it  to  the 
president,  the  president  surrenders  it  to  a  general  manager,  who 
in  turn  surrenders  it  to  the  general  freight  agents  of  his  own 
and  a  great  number  of  other  roads,  who  again  surrender  it  to  a 
large  number  of  soliciting  agents,  and  finally  these  soliciting 
agents  surrender  it  to  the  shippers.  The  shippers  practically 
make  their  own  rates.  The  result  is  confusion  and  demoralization 
o-f  traffic,  and  no  end  to  unjust  discriminations  between  shipper? 
and  localities." 

In  a  word,  the  railroad  system  of  the  country  fell  into  dis- 
order. In  the  fierce  struggle  for  traffic  which  ensued  the  execu- 
tive officers  of  the  railroads  lost  the  power  of  maintaining  rates, 
and  the  transportation  and  commercial  interests  of  the  country 
fell  into  confusion.  Outrageous  and  absurd  discriminations  pre- 
vailed. The  situation  became  intolerable. 

The  presidents  of  certain  of  the  great  trunk  roads  hit  upon 
the  expedient  of  so  extending  their  lines  as  to  gain  control  over 
the  commerce  of  defined  areas  and  in  this  way  to  maintain  just 
and  to  preserve  order.     But  pftpr  pnormnns  railroad  system? 


under  single  corporate  management  had  been  established  it  was 
found  that  the  control  over  rates  was  farther  from  realisation 
than  before.  The  tendency  of  rates  was  constantly  downward 
and  discriminations  continued.  At  last  the  companies  whi^.h 
had  indulged  in  the  policy  of  expansion,  to  their  astonishment 
discovered  that  they  had  created  new  elements  of  competition 
more  powerful  and  destructive  than  those  which  they  had  hoped 
to  eliminate.  Thus  they  were  brought  to  realize  the  fact  that 
elements  other  than  the  way  of  carriage  control  both  rates  and 
the  course  of  traffic.  At  last  it  was  realized  by  every  intelligent 
student  of  the  transportation  problem  that  the  whole  trouble 
arose  from  a  lack  of  administrative  control;  for  no  great  organiza- 
tion can  long  exist  without  some  sort  of  central  directory.  The 
world's  history  is  replete  with  illustrations  of  this  fact.  The  plan 
of  railroad  federations  as  a  means  of  self-government  and  of  pro- 
tecting the  public  interests  against  the  evils  of  an  uncontrolled 
and  demoralized  transportation  system  was  therefore  devised. 
The  late  Albert  Fink,  a  man  of  surpassing  genius  as  an  organizer 
and  administrator  of  complex  and  involved  commercial  interests, 
was  the  author  of  this  system. 

The  plan  adopted  had  for  its  object  the  maintenance  of  order 
and  the  maintenance  of  rates.  Boards  of  trade,  chambers  of  com- 
merce and  representatives  of  trade  interests  of  the  country 
heartily  concurred  in  this  conclusion;  for  the  demoralization  of 
rates  before  alluded  to  had  set  the  commerce  of  the  country  in 
confusion. 

The  railroad  companies  clearly  perceived  that  in  order  to  pre- 
vent unjust  discriminations,  the  most  important  duty  devolving 
upon  them  was  to  agree  as  to  the  relative  rates  which  should  pre- 
vail between  competing  points,  as  for  example  the  relative  rates 
which  should  prevail  between  Chicago  and  Boston,  Chicago  and 
N~ew  York,  Chicago  and  Philadelphia,  and  Chicago  and  Balti- 
more. This  was  necessary  in  order  to  compose  the  competitive 
struggle  between  those  four  seaboard  cities.  The  merchants  of 
the  cities  mentioned  also  perceived  the  absolute  necessity  for 
agreement  between  the  companies  as  to  relative  rates.  In  the 
absence  of  such  agreements  their  trade  with  the  great  West  had 
fallen  into  confusion;  financial  ruin  confronted  the  merchants 
as  well  as  the  railroad  companies.  This  in  brief  is  the  historic 
origin  of  agreements  both  as  to  absolute  rates  and  as  to  the  rela- 
tive rates  which  shall  prevail  as  between  competing  sections, 
cities,  markets,  and  centers  of  production  and  distribution. 

For  years  it  was  difficult,  and  finally  it  became  impossible  to 
maintain  such  rate  agreements,  none  of  which  were  enforceable  at 

IfiS 


law.  It  became  evident,  therefore)  that  the  companies  must  de- 
vise some  remedial  measure,  suggested  by  the  incidents  of  their 
own  interaction,  and  by  the  commercial  needs  of  the  country  with 
respect  to  transportation.  Evidently  such  rule  must  also  be  sus- 
tained by  that  enlightened  sense  of  self-interest  which  Blackstone 
lias  declared  to  be  the  substantial  foundation  of  beneficent  law. 
The  expedient  finally  adopted  was  that  of  agreements  as  to  the 
share  of  the  competitive  traffic  which  should  be  awarded  to  each 
competitor;  as  the  first  object  in  all  competitive  traffic  struggles 
is  to  secure  the  largest  possible  amount  of  traffic,  and  the  second 
to  secure  on  it  the  best  possible  paying  rates. 

I  think  I  mistake  not  in  saying  that  in  the  minds  of  thought- 
ful men  engaged  in  transportation,  in  commerce,  in  manufactures 
and  in  the  great  productive  industries  of  the  country  the  expedi- 
ent thus  adopted  constituted  the  logical  and  beneficent  adjust- 
ment of  struggles  which  had  run  to  demoralization  and  ruin.  1 
think  I  am  also  justified  in  saying  that  the  majority  of  the  reflect- 
ing men  who  have  been  appointed  to  positions  as  state  and  na- 
tional railroad  commissioners  are  in  favor  of  the  maintenance  of 
rates  through  agreements  as  to  the  division  of  competitive  traffic. 

From  the  foregoing  the  following  conclusions  appear  to  be 
justified : 

First.  While  the  railroads  cannot,  for  the  reason  before  stated, 
be  free  to  all  carriers,  they  can  and  must  be  free  and  impartial  to 
all  shippers. 

Second.  Experience,  the  only  safe  guide,  has  proved  beyond 
all  doubt  that  unrestrained  competition  in  railroad  transportation 
invariably  runs  to  unjust  discrimination  and  to  disorder. 

Third.  Eestraints  of  competition  through  combination  in 
railroad  transportation  have  been  beneficial  toward  the  public 
interests. 

Fourth.  Combination  in  railroad  transportation  under  the 
limitations  and  restraints  upon  it  which  prevail  in  this  country, 
has  been  beneficial  toward  the  public  interests. 

When  Mr.  Nimmo  concluded,  the  conference  adjourned  until 
10:30  o'clock,  September  14. 

The  Committee  on  Organization  and  Program  held  a  pro- 
tracted session  before  the  conference  assembled  for  the  second 
day's  work.  The  business  before  the  committee  was  the  question 
of  the  appointment  of  a  committee  on  resolutions.  This  action 
was  opposed  in  committee,  but  it  was  decided,  after  long  debate, 
in  the  affirmative. 

164 


MORNING   SESSION,    SEPTEMBER   14. 

The  conference  was  called  to  order  at  11  o'clock  by  Chair- 
man Howe.  The  Committee  on  Organization  and  Program  pre- 
sented a  report  recommending  the  appointment  of  a  committee 
on  resolutions,  said  committee  to  be  composed  of  fifteen  dele- 
gates to  be  appointed  by  the  chair,  the  committee  to  have  author- 
ity to  pass  upon  all  resolutions  presented,  which  should  be  sent 
directly  to  the  committee  without  being  presented  to  the  con- 
ference. 

Claggett  of  Idaho  moved  the  adoption  of  the  report,  and  was 
seconded  by  a  number  of  delegates  simultaneously. 

An  amendment  was  offered  by  McQuirk  of  Iowa  that  the 
committee  be  enlarged  to  include  one  from  each  state  and 
national  organization,  and  the  members  be  selected  by  the  state 
delegations. 

Weil  of  Pennsylvania  opposed  the  passage  of  any  resolutions 
on  the  ground  that  the  conference  was  for  educational  purposes 
and  under  the  call  could  not  adopt  a  policy. 

Jones  of  Indiana  and  Rosewater  of  Nebraska  led  the  debate 
in  favor  of  a  committee  on  resolutions.  The  opposition  was  led 
by  Prince  of  Texas  and  Atkinson  of  West  Virginia,  who  moved 
to  lay  the  report  on  the  table.  A  substitute  was  offered  that  all 
resolutions  be  referred  to  the  Committee  on  Organization  and 
Program. 

The  debate  was  exceedingly  warm,  but  no  party  or  sectional 
lines  were  drawn.  A  dozen  delegates  clamored  for  recognition. 
Cockran  of  New  York  secured  the  floor  and  moved  the  previous 
question,  that  of  adopting  the  committee  report.  In  doing  so 
the  speaker  pointed  out  that  the  debate  was  doubtless  the  result 
of  a  misconception  of  the  duties  of  the  committee.  He  was 
desirous  of  careful  action  by  which  alone  a  harmonious  confer- 
ence could  be  completed,  but  was  satisfied  with  the  resolution, 
adding,  however: 

"I  presume,  with  the  consent  of  the  mover,  that  on  the  last 
day  of  the  conference  motions  shall  be  in  order  to  discharge 

165 


that  committee  from  the  consideration  of  any  resolution  which 
may  have  been  committed  to  it  and  on  which  it  has  not  been  able 
to  report." 

The  amendatory  clause  was  accepted.  The  substitute  send- 
ing the  resolutions  to  the  general  committee  was  lost. 

The  report  was  then  adopted  with  the  amendments  offered 
by  Messrs.  McQuirk  and  Cockran. 

The  chairman  introduced  the  morning  speakers  in  turn  as 
named  by  Program  Committee. 

LAWSON  PUKDY. 

[New  York  Reform  Club. 

Lawson  Purdy,  of  the  New  York  Tariff  Reform  League,  was 
then  presented  to  the  conference,  and  said: 

The  Commercial  Year  Book  for  1899  defines  the  popular 
meaning  of  the  word  "trust"  as  "any  consolidation,  combine, 
pool,  or  agreement  of  two  or  more  naturally  competing  concerns, 
which  establishes  a  partial  or  complete  monopoly,  in  certain 
territory,  with  power  to  fix  prices  or  rates  in  any  industry." 

This  definition  may  seem  to  include  some  concerns  which 
it  is  not  my  purpose  to  discuss,  and  in  order  that  they  may  be 
excluded,  I  wish  to  call  attention  to  the  words  of  the  definition, 
"naturally  competing  concerns."  I  believe  it  is  now  generally 
conceded  that  there  are  certain  kinds  of  business  in  which  com- 
petition is  not  natural,  and  consequently  any  attempt  to  intro- 
duce competition  in  such  businesses  is  certain  to  fail.  More- 
over, so  long  as  competition  continues,  the  public  suffers  by 
reason  of  the  unnecessary  expense  of  conducting  the  business. 
A  broad  distinction  between  naturally  competitive  concerns,  and 
those  which  are  not  naturally  competitive,  lies  in  this,  that  any 
business  which  can  be  prosecuted  by  an  individual  or  corporation 
without  assistance  from  the  state,  and  is,  therefore,  open  to  all. 
is  naturally  competitive  business,  and  any  business  which  can 
only  be  prosecuted  if  some  state  power  is  delegated  to  the  indi- 
vidual or  corporation  which  desires  to  engage  in  it,  is  naturally 
noncompetitive. 

Examples  of  naturally  noncompetitive  businesses  will  occur  to 
everyone.  To  supply  a  city  with  gas  requires  an  exercise  of  gov- 
ernmental power,  and  it  is  at  once  seen  that  competition  is  ex- 
tremely wasteful  because  of  the  necessity  of  the  duplication  of 

186 


the  plant,  in  the  same  way  it  is  impracticable  to  have  true  com- 
petition in  the  carriage  of  passengers  through  the  streets  of  a 
city  on  a  street  railway,  and  no  one  can  build  such  a  railway  with- 
out the  delegation  of  state  power. 

Everyone  is  familiar  with  the  attempt  to  foster  and  maintain 
competition  in  the  supplying  of  gas  and  electricity  and  in  the 
carriage  of  passengers  and  goods  on  railways,  and  the  result  has 
been  the  merging  of  competing  lines,  or  some  combination  be- 
tween them  to  maintain  prices  and  divide  the  business. 

The  difference  of  opinion  which  now  exists  as  to  the  manner 
in  which  natural  monopolies  such  as  these  should  be  treated,  is 
a  difference  of  degree  rather  than  a  difference  of  kind.  The 
opinion  is  practically  unanimous  that  there  must  be  some  gov- 
ernmental regulations  and  supervision,  and  more  and  more  are 
coming  to  the  conclusion  that  governmental  regulation  should 
extend  to  the  point  of  absolute  ownership  and  operation. 

It  is  the  combination  of  concerns  which  are  naturally  com- 
petitive, and  such  combination  as  establishes  a  partial  or  com- 
plete monopoly,  which  I  wish  to  discuss. 

Mr.  Charles  F.  Beach,  Jr.,  in  an  address  on  "The  Trust  an 
Economic  Evolution/'  delivered  before  the  Union  League  Club. 
Chicago,  in  1894,  says :  "Nothing  is  so  certain  as  that  the  profit 
of  any  sort  of  business  can  never  be  raised  by  increase  of  price 
to  the  consumer,  beyond  a  normal  amount  for  any  length  of  time, 
without  tempting  the  cupidity  of  men  in  other  lines,  and  creating 
at  once  an  outside  competition.  No  combination  of  manufac- 
turers, not  protected  by  government  patents,  by  an  iniquitous 
tariff,  or  by  unholy  alliances  with  railways,  can,  by  never  so 
stringent  a  compact  between  themselves,  prevent  any  other  set 
of  men  from  going  into  their  business,  whenever  the  condition 
of  the  trade  promises  more  than  an  average  profit."  The  impor- 
tant part  of  this  statement  by  Mr.  Beach  is  the  exception,  for  the 
combinations  not  protected  by  an  iniquitous  tariff  are  few  in 
number.  Of  some  four  hundred  trusts  enumerated  in  the  Com- 
mercial Year  Book,  more  than  two-thirds  are  directy  affected 
by  the  tariff,  and  there  are  very  few  which  do  not  get  some  tariff 
assistance,  directly  or  indirectly. 

It  is  loudly  asserted  by  some  that  England  is  a  free  trade 
country  and  that  there  are  as  many  trusts  in  England  as  in  the 
United  States.  In  the  first  place,  England  has  not  pushed  the 
doctrine  of  free  trade  to  its  logical  conclusion  by  any  means,  and 
still  suffers  from  tax  restrictions  upon  production  and  trade.  In 
the  second  place,  those  who  assert  that  England  is  plastered  with 
trusts  have  so  far  failed  to  name  any  which  compare  with  bun- 


dreds  in  the  United  States  in  their  power  to  raise  prices  and  prac- 
tice extortion  upon  the  public. 

In  an  article  in  the  Forum  of  May,  1899,  on  "Trusts  in 
Europe,"  Wilhelm  Berdrow  says  that  trusts  have  extended  rap- 
idly in  Germany  and  France,  hut  that  "as  far  as  England  is  con- 
cerned it  must  be  admitted  that,  notwithstanding  her  great  in- 
dustrial activity  and  a  competitive  warfare  not  less  pronounced 
than  that  of  other  states,  the  trust  system  has  as  yet  found  but 
tardy  acceptance  in  that  country.  This  is  doubtless  due  in  some 
degree  to  the  thorough  application  of  the  principles  of  free  trade, 
for  it  is  well  known  that  the  largest  trusts  are  powerless  unless 
their  interests  are  secured  by  a  protective  tariff  excluding  from 
the  home  market  the  products  of  foreign  countries." 

It  is  so  obvious  to  the  most  ordinary  intelligence  that  it  is 
more  difficult  to  make  a  combination  of  the  producers  in  many 
countries  than  in  one,  that  it  hardly  needs  proof. 

In  1889  the  Hon.  John  Sherman  said:  "The  primary  object 
of  a  protective  tariff  is  to  divide  the  fullest  competition  by  indi- 
viduals and  corporations  in  domestic  production.  If  such  indi- 
viduals or  corporations  combine  to  advance  the  price  of  the 
domestic  product  and  to  prevent  the  free  result  of  open  and  fair 
competition,  I  would  without  a  moment's  hesitation  reduce  the 
duties  of  foreign  goods  competing  with  them,  in  order  to  break 
down  the  combination.  Whenever  this  free  competition  is 
evaded  or  avoided  by  combination  of  individuals  or  corporations, 
the  duty  should  be  reduced  and  foreign  competition  promptly 
invited." 

I  do  not  contend  that  the  only  cause  for  combination  which 
restrains  trade  is  the  tariff,  but  the  tariff  does  foster  and  assist 
in  maintaining  such  combinations.  The  tariff  is  under  the  con- 
trol of  the  federal  government;  the  abolition  of  duties  upon 
articles  produced  by  trusts  is  easy,  immediate,  and  effective. 
When  this  special  privilege  is  withdrawn  we  will  then  be  in  a 
better  position  to  do  what  further  may  be  necessary. 

Many  manufacturers  are  selling  goods  for  export  at  prices 
much  lower  than  at  home,  and  a  condition  which  permits  and 
induces  manufacturers  to  do  this  is  indefensible. 

For  many  years  manufactured  goods  have  been  sold  cheaper 
for  export  than  at  home.  In  1890  the  Australasian  and  South 
American,  a  paper  devoted  to  the  export  trade,  made  the  fol- 
lowing admission:  "By  comparing  the  prices  at  which  goods 
are  sold  to  the  export  merchant  and  the  catalogue  rates  which 
the  ordinary  purchaser  pays,  it  is  possible  to  show  a  very  striking 
discrepancy  in  favor  of  the  exporter."  The  paper  claimed  that 

168 


PAUL  MORTON 

SAMUEL  ADAMS  ROBINSON 

JAMES  H.  RAYMOND 


BENJAMIN  R.  TUCKER 
LAURENCE  GRONLUND 
H.  T.  NEWCOMB 


these  lower  prices  were  for  the  wholesale  trade  alone,  whereupon 
the  New  York  World  published  a  letter  from  the  Engineering 
and  Mining  Journal,  a  paper  which  also  paid  special  attention  to 
the  export  trade.  An  extract  from  the  letter,  dated  August  26, 
1890,  is  as  follows:  "Your  statement  that  the  foreigner  can  buy 
at  retail  in  this  market  cheaper  than  the  domestic  consumer  is 
as  indisputable  as  the  daily  revolution  of  the  earth.  We  can 
enumerate  any  number  of  instances  where  houses  have  written 
us,  Trices  furnished  are  for  export  only,  and  it  would  be  most 
injurious  to  us  if  these  figures  were  circulated  in  the  home 
market/  " 

In  a  speech  delivered  a  few  months  ago  before  the  Foundry- 
men's  Association  of  Philadelphia,  Mr.  A.  B.  Farquhar,  a  large 
manufacturer  of  agricultural  tools,  testified  to  the  conditions 
which  exist  to-day.     He  says:    "We  must  see  at  a  glance  that 
there  are  a  great  many  products  of  manufacturing  industries  in 
this  country  which,  whatever  may  have  been  their  need  of  pro- 
tection heretofore,  most  certainly  do  not  need  it  to-day.     In  the 
ten  months  ending  with  April  last,  the  country  exported  $276,- 
000,000  worth  of  manufactures,  nearly  18  per  cent  more  than 
the  corresponding  ten  months  of  1897  and  1898.     This  amount 
considerably  exceeding  that  of  our  import  of  manufactured  goods 
for  the  same  period,  covering  a  wide  range  of  products,  conclu- 
sively proves  that  we  have  nothing  to  fear  from  foreign  manu- 
factures.   Yet  a  duty  is  still  demanded  on  these  very  products, 
and  why?    Not  for  revenue,  because  the  government  gets  no  rev- 
enue from  such  duties,  but  to  enable  the  combinations  that  mo- 
nopolize their  production  to  exact  higher  prices  in  this  country 
than  they  can  obtain  abroad,  and  for  no  other  reason.   The  Sugar 
Trust,  with  its  rebates  to  encourage  exportation  and  its  high  pro- 
tective duty  to  keep  up  the  price  of  its  products  within  the 
country,  thus  favored  by  the  law  in  two  directions;  the  steel  rail 
combine,  which  sends  its  product  to  all  quarters  of  the  globe  (one 
mill  recently  shipping  70,000  tons  of  rails  for  the  North  China 
llailway),  and  put  them  down  at  the  very  doors  of  the  British 
shops,  while  at  the  same  time  a  Boston  Company  finds  it  cheaper 
to  get  rails  from  England  and  pay  the  duty  than  to  buy  at  the 
terms  allowed  at  home.     .     .     .     These  and  many  other  asso- 
ciations, all  profiting  handsomely  by  legislative  favoritism,  tempt 
us  to  appeal  to  the  law  not  to  lay  its  hand  upon  them  in  any  way 
directly,  but  only  to  lift  from  us  the  hand  with  which  it  holds 
us  down  in  order  to  give  the  monopolies  advantage." 

I  believe  we  have  passed  the  point  wlure  any  objection  can 
be  raised  to  the  abolition  of  protective  duties  on  the  ground  that 

169 


they  sustain  or  raise  wages.  Years  ago  we  had  the  testimony  of 
Mr.  Evarts  and  Mr.  Elaine  that  American  labor  was  the  cheapest 
in  the  world,  and  received  the  smallest  share  of  its  own  product. 
We  have  grown  great  in  manufacturing  because  we  have  the  most 
skilled  labor  and  the  best  material  with  which  to  work.  The 
truth  is  that  the  tariff,  by  shutting  out  foreign  competition,  en- 
ables the  trusts  to  shut  down  domestic  factories,  employ  less  labor, 
and  thereby  reduce  wages.  Mills  make  money  by  shutting  down 
instead  of  by  the  production  of  goods. 

Of  course  consumers  suffer.  That  is  why  this  conference  was 
called.  Professor  Maas,  formerly  chemical  expert  of  the  Glucose 
Sugar  Befming  Company,  testified  before  the  Industrial  Com- 
mission that  the  price  of  Glucose  was  doubled  as  soon  as  the  trust 
was  formed  and  the  glucose  plant  worth  $6,000,000  was  capital- 
ized at  forty. 

The  National  Glass  Budget  on  July  22d  said  editorially: 
"Manufacturers  have,  through  the  strength  of  their  combination, 
succeeded  in  raising  and  maintaining  prices  to  an  extent  that 
would  have  been  considered  dangerous  and  ruinous  to  the  indus- 
try if  it  had  resulted  directly  from  an  advance  of  wages  enforced 
by  the  workers'  organization,  but  having  been  the  result  of  a 
closer  union  among  manufacturers,  the  thing  is  very  different, 
and  the  increased  influx  of  foreign  glass,  stimulated  by  high 
prices  of  domestic,  with  which  conference  committee  men  have 
for  decades  threatened  the  workers,  has,  strangely,  not  material- 
ized, but  in  spite  of  all  that  the  workers  are  economically  in  a 
worse  position  to  enforce  an  advance  than  they  have  been  for 
many  years." 

The  Independent,  of  Forest  City,  Iowa,  reports  that,  "The 
Indiana  Wire  Fence  Company  of  Crawfordsville  has  been  ab- 
sorbed by  the  American  Steel  and  Wire  Company,  and  its  build- 
ings now  stand  deserted.  The  fence  factory  was  Crawfordsville's 
chief  industry.  The  product  became  known  all  over  the  country, 
and  the  demand  increased  so  that  the  factory  was  enlarged  almost 
weekly.  There  were  regularly  employed  about  seventy-five  men, 
sometimes  more  than  that  number,  nearly  all  of  whom  have  fam- 
ilies. The  pay-rolls  for  labor  alone  amounted  to  nearly  $52,000 
a  year,  about  every  dollar  of  which  was  spent  in  Crawfordsville." 
The  company  did  not  wish  to  sell  out  to  the  trust,  but  was  threat- 
ened that  the  trust  would  cut  prices  so  low  that  they  would  be 
forced  out  of  business,  and  the  sale  was  made  on  January  23, 
1899.  The  account  continues :  "Then  the  blow  fell  upon  Craw- 
fordsville. The  men  were  thrown  out  of  employment.  Most 
of  them  had  gone  into  building  and  loan  associations,  had  bor- 

170 


rowed  money,  and  were  building  themselves  homes.  They  could 
not  meet  their  payments.  Their  homes  were  taken  away  from 
them  and  they  left  the  city.  There  was  no  work  for  them  here. 
Clerks  and  salesmen  lost  their  positions  and  every  branch  of  busi- 
ness felt  this  blow." 

It  is  sometimes  said :  "Law  made  trusts,  and  law  can  unmake 
them."  I  believe  this  is  absolutely  true,  but  I  think  it  commonly 
conveys  a  wrong  impression.  Law  has  made  trusts  by  conferring 
special  privileges,  and  those  privileges  can  be  abolished.  The 
chief  privilege,  and  the  one  most  easily  reached,  is  the  tariff. 
Let  no  one  imagine  that  corporations,  which  are  creatures  of  law, 
are  the  only  trusts,  for  secret  agreements  between  individuals 
have  been  effective  to  control  supply  and  raise  prices  without  a 
single  corporation  being  involved. 

The  doctrine  of  laissez  faire  has  been  much  abused,  and  it  is 
common  to  hear  that  it  has  failed.  It  has  never  yet  been  tried. 
It  does  not  mean,  "Let  things  alone  as  they  are,"  but  "Clear  the 
road  and  let  them  alone."  Clear  away  every  special  privilege. 
Then,  and  not  till  then,  can  we  know  whether  any  restriction  is 
necessary.  While  special  privileges  remain,  attempts  to  restrain 
combination  will  be  futile. 

Trusts  have  little  dread  of  statute  law  which  the  courts  will 
take  years  to  interpret.  They  fear  the  repeal  of  privilege,  and 
"Repeal"  should  be  the  battle  cry  of  those  who  believe  in  equal 
rights  before  the  law. 


BYRON  W.  HOLT. 

New  England  Free  Trade  League. 

Byron  W.  Holt  spoke  on  "Tariff,  the  Mother  of  Trusts" : 

When  H.  0.  Havemeyer  last  June  startled  the  country  with 
the  declaration  before  the  Industrial  Commission  that  "The 
Mother  of  All  Trusts  is  the  Customs  Tariff  Bill,"  he  came  so  near 
to  telling  the  truth  that  the  protectionist  organs  of  the  country 
immediately  began  calling  him  names  and  saying  "sour  grapes," 
and  the  organ  of  the  Protective  Tariff  League  is  still  devoting 
a  large  portion  of  its  space  to  the  wicked,  traitorous  Havemeyer. 
If  he  had  said  special  privileges,  of  which  the  tariff  is  foremost, 
are  the  mother  of  trusts,  he  would  have  been  still  nearer  to  the 
truth. 

That  the  tariff,  by  shielding  our  manufacturers  from  foreign 

171 


competition,  makes  it  easy  for  them  to  combine,  to  restrict  pro- 
duction, and  to  fix  prices — up  to  the  tariff  limit — ought  to  be  evi- 
dent to  every  intelligent  man.  It  ought  also  to  be  evident  to 
all  here  that  the  greatest  objection  to  trusts  is  due  to  their  ability 
to  raise  prices  above  a  normal,  profit-producing  point.  That  the 
trusts  raise  prices  whenever  possible  to  what  they  consider  the 
maximum  profit  point  is  certain.  It  is  asserted  by  the  trusts' 
advocates  that  trusts  can  produce  more  cheaply  than  individual 
firms,  and  that  they  have  lowered  prices.  It  may  be,  and  prob- 
ably is,  true  that  trusts  usually  produce  cheaper,  but  it  is  cer- 
tainly not  true  that  they  have  lowered  prices. 

Out  of  four  hundred  trusts  which  I  have  enumerated,  I  do 
not  believe  that  ten  have  lowered  prices.  In  fact,  I  know  of 
none,  except  one  or  two,  and  these  have  depreciated  the  quality 
of  their  product.  In  one  such  case  the  prices  are  held  so  high 
that  there  are  heavy  imports  of  competing  goods,  although  there 
is  a  duty  on  them  of  nearly  100  per  cent.  In  nine  cases  out  of 
ten  trusts  have  raised  prices — often  more  than  50  per  cent.  That 
much  of  the  present  rise  in  prices  is  due  to  general  economic 
conditions  is  probably  true.  On  the  other  hand,  it  is  just  as 
true  that,  had  there  been  no  tariff  duties,  the  rise  in  prices  would 
neither  have  been  so  general  nor  so  great.  The  trusts  have  taken 
full  advantage  of  the  powers  and  special  privileges  derived  from 
their  tariff  partner — the  government.  Congress  should  speedily 
dissolve  this  iniquitous  partnership. 

If  time  permitted,  I  should  be  glad  to  take  up  the  trusts  in 
detail  and  show  how  each  is  fostered  and  protected  by  the  tariff. 
Some  of  these  are  the  various  glass,  furniture,  leather,  iron  and 
steel,  paper,  coal,  woolen  goods,  and  silk  goods  trusts.  The  sugar 
trust  is  still  a  tariff  trust.  The  protection  on  refined  sugar — on 
the  cost  of  refining — is,  as  Henry  T.  Oxnard,  of  the  beet  sugar 
industry,  says,  fully  50  per  cent,  instead  of  only  3£  per  cent, 
as  Mr.  Havemeyer  told  the  Industrial  Commission.  It  is,  how- 
ever, probably  true  that  Havemeyer  would  be  glad  to  see  free 
trade  in  raw  sugars  and  little  or  no  duty  on  refined.  He  is 
anxious  not  only  to  compel  his  present  cane  sugar  refining  com- 
petitors to  sell  out  to  him  at  reasonable  figures,  but  he  wishes  to 
prevent  the  further  growth  of  the  beet  sugar  industry. 

If  there  is  one  industry  more  than  any  other  to  which  the  pro- 
tectionists have  always  "pointed  with  pride,"  it  is  the  American 
tin  plate  industry.  "Just  look  at  this  great  industry  if  you  want 
to  see  an  object  lesson  in  protection!"  There  are  two  points  of 
view — that  of  the  manufacturer  and  that  of  the  consumer. 

To  the  manufacturer  everything  looks  lovely.     He  asked  to 

m 


have  2  1-5  cents  per  pound  duty  added  to  the  price  of  imported 
tin  plate  until  he  could  experiment  to  see  if  he  could  make  it 
at  a  profit  at  ahout  double  the  price  of  foreign  tin  plate.  Mc- 
Kinley  granted  the  request  and  the  experiment  began.  It  was 
rendered  successful  largely  through  the  aid  of  cheap  iron  and 
steel  from  1893  to  1898.  So  great  was  the  reduction  in  the  cost 
of  steel  bars  and  sheets  that  the  1 1-5  cents  per  pound  duty  of 
the  Wilson  bill,  from  1894  to  1897,  afforded  about  the  same 
protection  as  did  the  McKinley  duty  of  1891.  The  profits  of 
tin  plate  manufacturers  were  great,  and  by  1897  we  were  making 
half  of  the  plates  consumed  in  this  country.  In  1897  the  duty 
was  gratuitously  raised  to  1£  cents  per  pound. 

By  1898  the  great  profits  of  the  business  had  increased  the 
number  of  tin  plate  plants  to  about  forty  and  the  number  of  mills 
to  about  280.  For  the  first  time  in  our  history  internal  compe- 
tition had  so  lowered  prices  that  but  few  plates  were  imported — 
except  for  re-export  by  large  manufacturers  who  could  avail 
themselves  of  the  benefits  of  drawback  duties — and  our  manu- 
facturers were  not  reaping  the  full  benefit  of  the  duties  levied 
especially  for  their  benefit.  This  situation  worried  the  manu- 
facturers. A  part  of  the  duty  was  being  wasted  and  lost  by  their 
foolish  policy  of  competing  with  each  other.  They  got  together 
and  formed  a  compact,  air-tight  monopoly,  which  is  a  credit  to 
its  mother — the  tariff.  To  make  certain  that  they  would  be 
able  to  put  and  hold  prices  up  to  the  Dingley  duty  limit,  they 
clinched  their  trust,  it  is  said,  by  making  a  five-year  contract 
with  the  producers  of  tin  plate  mills,  which  practically  prevents 
others  from  starting  in  business  during  this  period.  They  also, 
through  their  relations  with  the  chief  steel-bar  producing  com- 
panies, obtained  such  control  of  this  principal  raw  material  that 
even  if  an  outsider  could  obtain  a  mill  he  would  still  be  unable 
to  produce  tin  plates  for  lack  of  raw  materials.  Hence,  while 
there  is  some  talk  of  outside  competition,  there  is  virtually  no 
competition  at  present,  nor  is  there  likely  to  be  any  while  the 
present  duty  is  in  force.  The  mills  and  plants  of  this  trust  are 
worth  about  $10,000,000.  It  is  capitalized  at  $50,000,000— 
$20,000,000  preferred  and  $30,000,000  common- stock.  Big  div- 
idends will  probably  be  paid  on  both  kinds  of  stock,  the  total 
market  value  of  which  is  now  about  $30,000,000. 

Thus,  from  the  standpoint  of  the  manufacturers,  all  is  rosy, 
and  is  likely  to  remain  so  if  the  wicked  free  traders  will  only  let 
the  tariff  alone. 

The  consumer,  if  he  has  his  eyes  wide  open,  sees  a  different 
picture.    He  saw  prices  held  up  by  duties  until  the  tin  plate  in- 
ns 


fant  was  full  grown  and  capable  of  giving  him  cheap  tin  plate, 
and  now  he  sees  them  held  up  by  means  of  a  monopoly  trust  sup- 
ported by  what  he  considers  an  iniquitous  tariff.  He  figures  up 
what  this  duty  has  cost  him.  He  finds  that  from  the  time  the 
McKinley  act  took  effect  in  1891  to  the  Wilson  law  of  1894,  there 
were  1,783,000,000  pounds  of  tin  plate  imported,  on  which  he  paid 
a  duty  of  2  1-5  cents  per  pound — amounting  to  $39,226,000.  Dur- 
ing this  period  our  home  manufacturers  made  242,700,000 
pounds,  on  which  they  virtually  collected  a  duty  of  $5,339,400. 
From  1894  to  1897,  1,123,000,000  pounds  were  imported,  on 
which  a  duty  of  $13,442,000  was  paid.  During  this  period  the 
American  manufacturers  produced  948,000,000  pounds,  on  which 
about  the  full  duty,  or  $11,376,000  was  collected.  The  con- 
sumer therefore  finds  that  when  this  infant  was  five  years  old  it 
had  cost  him  $69,383,400,  or  about  $14,000,000  a  year.  During 
1898  materials  were  cheap,  and  the  infant  cost  only  $5,000,000 
or  $6,000,000  to  keep.  The  consumer  hoped  that  by  1899  the 
infant  would  be  able  and  willing  to  support  itself.  The  price  at 
which  our  manufacturers  laid  down  tin  plate  in  New  York  in 
1898  ($2.75)  was  only  20  cents  above  the  price  of  English  tin 
plates  in  bond.  Surely  this  slight  difference  could  be  overcome 
in  1899,  and  the  consumer  would  no  longer  have  to  pay  million* 
of  dollars  each  year  to  support  this  costly  infant.  But  the  infant 
had  been  spoiled  by  too  much  protection  and  refused  to  give 
up  its  luxurious  living  and  to  support  itself.  It  returned  to  its 
tariff  nourishment,  and  is  now  eating  it  as  greedily  as  ever.  It 
has  put  up  the  price  of  tin  plate  from  $2.75  per  box  of  100  pounds, 
in  October,  1898,  to  $4.80,  the  price  to-day — an  advance  of  $2.05 
per  box,  or  over  70  per  cent.  During  the  same  time  the  price  of 
imported  plates  has  risen  from  $2.50  to  $3.60,  or  $1.10  per  box 
in  bond,  or  from  $4  to  $5.10  out  of  bond — a  rise  of  only  27£  per 
cent.  The  consumer  estimates  that  the  tariff  food  for  this  greedy 
infant  will  cost  him  not  less  than  $10,000,000  in  1899,  and,  at 
the  present  rate,  will  exceed  $12,000,000  in  1900.  He  is  getting 
out  of  patience  with  the  youngster,  and  threatens  to  cut  off  his 
supply  of  tariff  food  and  to  let  him  shift  for  himself. 

The  protectionist  gravely  tells  us  that  the  tin  plate  tax  is 
paid  by  the  foreigner;  that  a  combination  of  Welsh  manufac- 
turers kept  up  prices  before  the  McKinley  bill  existed  and  ex- 
torted from  the  American  consumers  all  the  tariffs  would  bear; 
that  they  afterwards  lowered  their  prices  because  they  could  not 
live  without  the  American  market,  and  that  if  we  were  not  now 
producing  our  own  tin  plate  the  Welsh  trust  would  be  charging 
us  just  as  much  as  are  our  own  manufacturers.  The  fact  that 

174 


prices  went  up  under  the  McKinley  duty,  down  under  the  Wilson 
duty,  and  up  again  under  the  Dingley  duty,  upsets  the  plausibil- 
ity of  this  theory,  which,  at  best,  is  based  upon  unsubstantiated 
assertions. 

It  would  be  interesting  to  discuss  the  effect  of  the  tariff  upon 
wages,  through  the  trusts.  The  only  way  in  which  tariff  duties 
can  benefit  labor  is  through  a  double  trust  composed  of  both 
manufacturers  and  their  employes.  This  can  occur  only  when 
the  employees  are  well  organized  and  have  iron-clad  apprentice- 
ship rules.  It  has  occurred  only  temporarily,  and  in  a  few  in- 
dustries— notably  in  that  of  window  glass.  But  even  in  this  in- 
dustry it  is  doubtful  if  the  employees  as  a  whole  got  much  of  the 
tariff  benefits,  for  what  they  apparently  gained  in  higher  wages 
was  lost  through  lack  of  employment  when  the  mills  were  closed 
for  the  purpose  of  restricting  production  and  raising  prices. 

It  would  also  be  interesting  to  discuss  the  relation  between 
the  tariff  and  the  lower  prices  at  which  foreigners  can  obtain  our 
trust  products  than  are  charged  to  American  consumers.  Nearly 
all  kinds  of  manufactured  goods  are  sold  at  considerably  reduced 
prices  when  for  export.  An  acquaintance  of  mine  about  to  sail 
for  India  has  just  purchased  a  bicycle  for  $25  which  agents  are 
not  allowed  to  sell  for  use  in  this  country  for  less  than  $40.  The 
Eemington  typewriter  has  for  years  been  sold  for  export  at  25 
per  cent  below  home  market  prices.  The  foreigner  buys  Diss- 
ton's  saws  at  a  discount  of  45  per  cent,  while  our  own  dealers  can 
get  a  discount  of  only  25  per  cent,  or,  if  they  are  wholesalers,  25 
per  cent  and  10  per  cent — an  advance  of  22  per  cent  on  the  prices 
to  foreigners.  Our  sewing  machines  cost  South  Americans  much 
less  than  North  Americans.  To  fully  appreciate  the  beneficent 
effects  of  American  tariffs  and  trusts  you  must  be  a  foreigner. 

"We  are  told,  about  once  a  week,  by  the  New  York  Tribune 
and  other  high  tariff  organs,  that  the  tariff  cannot  be  the  mother 
of  trusts,  because  there  are  trusts  in  free  trade  England.  It  is 
true  that  there  are  occasional  trusts  in  England.  But  it  is  not 
true  that  they  have  generally  raised  prices  as  have  our  own  tariff- 
protected  trusts.  The  British  consumer  has  the  whole  world  for 
his  market,  and,  if  some  home  trust  attempts  to  raise  prices,  he 
can  supply  his  wants  from  abroad.  England  has  comparatively 
few  trusts,  and  they  are  far  less  obnoxious  than  are  the  numerous 
trusts  in  protected  Germany  and  America. 

The  heart  of  the  trust  problem  is  in  our  tariff  system  of  plun- 
der. The  quickest  and  most  certain  way  of  reaching  the  evils 
of  trusts  is  not  by  direct  legislation  against  them,  or  by  consti- 
tutional amendment,  but  by  the  abolition  of  tariff  duties.  Let 

175 


Congress  take  up  the  Dockery  amendment  to  the  Dingley  bill, 
and,  if  there  be  any  likelihood  that  it  will  pass,  the  lobbies  at 
Washington  will  be  filled  with  trust  directors  and  agents.  Let 
a  constitutional  amendment  be  proposed,  and  the  trusts  will  take 
only  a  ^passing  interest  in  the  discussion.  They  care  but  little 
for  legislation  or  constitutions,  but  they  have  a  mortal  fear  of 
free  trade. 

The  tariff-trust  situation  may  be  illustrated  in  this  way: 
A  great  city  is  on  the  banks  of  a  river,  the  water  of  which  is 
contaminated  by  the  refuse  of  other  cities  further  up  the  stream. 
The  city  gets  its  entire  supply  of  water  from  this  river,  not  be- 
cause there  is  not  an  ample  supply  of  pure  water  near  at  hand, 
but  because  the  fathers  of  the  city,  in  their  wisdom,  have  passed 
prohibitive  laws  which  practically  prevent  the  people  from  ob- 
taining the  pure  water.  The  city  is  stricken  with  disease,  and 
the  death  rate  has  reached  an  alarming  height.  The  city  has 
twice  as  many  doctors,  druggists,  and  undertakers  as  other  cities 
of  similar  size.  The  doctors  have  combined  to  obtain  the  highest 
possible  rates  for  their  services.  The  druggists,  undertakers, 
coffin-makers,  pill-makers,  distilled  water  manufacturers,  hearse- 
drivers  and  flower-growers  and  wreath-makers  all  have  compact 
organizations,  to  make  it  as  expensive  as  possible  to  die.  All 
of  these  "protected"  industries  are  in  politics  to  see  that  the  city 
council  remain  true  to  "home  industries." 

Money  is  spent  freely  to  prevent  the  re-election  of  any  coun- 
cilman who  is  such  a  traitor  to  his  own  city  as  to  advocate  free 
and  pure  water.  The  citizens  becoming  rebellious  at  the  high 
prices  charged  for  doctors,  medicine,  coffins,  hearses,  and  flowers, 
a  trust  conference  has  been  called  to  discuss  what  evils,  if  any, 
grow  out  of  these  various  death-dealing  trusts,  and  what  laws,  if 
any,  are  necessary  to  do  away  with  these  evils  or  with  the  trusts 
themselves.  Some  assert  that  the  present  anti-trust  laws  are  suf- 
ficient if  only  there  were  courageous  attorneys-general  and  hon- 
est judges  to  enforce  them.  Others  believe  in  more  drastic  anti- 
trust legislation  and  in  constitutional  amendments.  -  Some  of 
the  learned  doctors  in  the  council  attempt  to  quiet  the  alarm  by 
asserting  that  the  trusts  have  really  lowered  instead  of  raised  the 
cost  of  dying,  and  that  anyway  people  sometimes  die  in  other 
cities.  Some  plain,  ordinary  citizens  who  have  not  much  stand- 
ing or  power  in  the  community  suggest  that  the  way  to  get  rid 
of  the  trusts  and  to  lower  the  death  rate  is  to  remove  the  restric- 
tions and  to  give  the  people  pure  and  cheap  water.  But  little 
attention  is  paid  to  the  suggestions  of  these  "theorists,"  though 
some  of  the  other  delegates  agree  that  pure  water  might  be  a 

176 


partial  remedy.  When  the  conference  adjourned  it  declared  that 
trusts  were  both  good  and  bad  and  recommended  that  a  con- 
stitutional amendment  be  submitted  to  the  people  which  would 
make  it  possible  to  annul  the  certificates  and  licenses  of  doctors 
and  druggists  found  guilty  of  belonging  to  bad  trusts. 

What  should  have  been  the  principal  question  discussed  at 
that  conference?  More  trust  legislation  or  simply  free  water? 

What  is  the  vital  question  before  this  conference?  More 
complicated  and  dangerous  restrictive  legislation  or  simply  free 
trade? 


JOHN  F.  SCANLAN. 

Western  Industrial  League. 

John  F.  Scanlan,  of  Illinois,  spoke  on  "Trusts  and  Free 
Trade,"  and  said : 

After  the  object-lesson  of  the  last  panic  it  requires,  shall  i 
call  it  courage,  for  any  person  to  come  before  the  American  peo- 
ple and  ask  them  to  adopt  free  trade  as  a  system  of  political 
economy  for  this  nation.  For  seventy  years  the  industries  of  this 
country  have  been  bombarded  from  within  and  without,  with  an 
energy  born  of  the  most  vicious  and  destructive  spirit,  and  the 
leading  hosts  in  that  bombardment  have  been  and  are  enemies 
of  our  welfare,  aided  by  a  few  theoretical  professors,  free  trade 
dreamers  and  political  free  lances.  Experience  has  pushed  aside 
the  free  trade  shibboleths  of  "the  tari'ff  is  a  tax,"  "robber  barons," 
"the  duty  is  added  to  the  cost/'  "the  farmer  is  robbed/'  etc.,  all 
these  falsehoods  have  now  been  boiled  down  to  a  legitimate  suc- 
cessor, "The  tariff  is  the  mother  of  trusts." 

To  charge  the  existence  of  trusts  to  protective  tariff  is  as  un- 
fair, if  not  as  ridiculous,  as  to  charge  them  to  the  Declaration  of 
Independence,  which  gave  the  opportunity,  or  to  human  life  that 
gives  us  the  energy.  Were  it  not  for  protective  tariffs,  we  now 
would  be,  not  the  leading  farming,  manufacturing  and  consuming 
nation,  with  the  best  credit  and  most  gold  of  any  in  the  world, 
on  the  contrary  we  would  be  down  among  the  poor  nations  and 
would  not  be  troubled  with  the  problem  of  how  to  chain  down  to 
the  best  interest  of  the  majority,  this  new  development  of  Ameri- 
can energy,  the  trusts. 

The  collecting  of  revenue  is  not  the  sole  object  of  protection, 
That  is  secondary.  The  most  important  is  the  creating  centers 
of  industrial  activity  within  our  country;  bringing  the  consumers 

177 


and  producers  close  together;  adding  the  labor  profit  of  both 
to  the  nation's  wealth,  which  gives  the  people  an  -opportunity 
to  develop  their  natural  genius,  sure  to  produce  more  freedom 
and  a  better  civilization ;  increase  wages,  lower  the  price  of  com- 
modities and  increase  the  consuming  powers  of  the  home  market. 
Experience  proves  we  cannot  have  these  conditions  under  free 
trade. 

All  down  through  the  ages  man  has  lived  under  liberty  or  in 
slavery.  There  are  two  kinds  of  slavery,  the  slavery  of  purchase 
and  the  slavery  of  conditions.  Man  is  a  slave  of  conditions  when 
he  cannot  use  the  forces  of  nature  to  help  him  to  better  results 
and  higher  civilization.  The  latter  state  is  brought  about  by  the 
absence  of  national  industry  or  its  destruction. 

We  have  been  victims  of  the  latter  system  of  slavery  six  times 
since  the  Republic  was  .established,  resulting  from  the  six  free 
trade  panics,  each  of  which  was  but  a  repetition  of  the  losses  and 
suffering,  in  proportion  to  the  inhabitants,  which  we  experienced 
in  the  recent  panic  of  1893  to  1897. 

The  dates  of -these  panics  are  1784,  1820,  1837,  1857,  1873, 
1893.  During  those  panics  a  great  proportion  of  the  wealth  of 
the  nation  passed  away  from  us.  During  the  intervening  pro- 
tection eras  all  the  wealth  and  progress  we  made  was  achieved, 
and  if  free  trade  will  be  adopted  it  will  turn  our  home  market 
again  over  to  the  tender  mercies  of  foreign  trusts.  If  we  must 
have  trusts  let  them  be  American  with  a  well  employed  and  a  well 
paid  labor,  a  prosperous  free  citizen  to  bring  the  trusts  within 
the  law.  I  wish  to  call  your  attention  to  the  remarkable  fact  that 
every  one  of  those  free  trade  panics  brought  the  same  character 
of  commercial  losses  and  physical  suffering  to  the  people,  namely : 

1st.  Low  duties  brought  larger  importations,  loss  of  con- 
fidence and  suspension  of  industries. 

2nd.  Labor  idle,  moody  and  rebellious,  reduction  of  wages, 
workingmen  fed  at  public  soup  houses. 

3rd.     Great  increase  of  commercial  bankruptcy. 

4th.     Gold  leaves  the  country  in  vast  quantities. 

5th.     Government  revenues  less  than  expenditures. 

6th.     Consuming  powers  of  the  home  market  greatly  reduced. 

Increase  in  the  price  of  foreign  goods,  decrease  in  the  price  of 
home  products,  with  a  landslide  progress  of  all  the  people  towards 
the  slavery  of  conditions,  which  always  brought  forth  an  agitation 
for  the  American  system  of  tariff;  when  enacted  it  invariably 
stopped  the  panic  and  as  regularly  brought  about  the  reverse  of 
the  above  conditions,  namely: 

178 


1st.  American  industry  fully  and  profitably  employed  and 
increased. 

2nd.     Labor  employed,  good  wage,  progressive,  saving  money. 

3rd.  Great  stability  in  commercial  circles,  decrease  in  bank- 
ruptcy. 

4th.     Government  revenues  more  than  expenditures. 

5th.     Gold  flows  into  the  country  in  vast  quantities. 

6th.  Consuming  powers  of  the  people  vastly  increased,  with 
great  expansion  of  liberty,  by  reason  of  the  wealth  created  through 
diversified  industry,  bringing  prosperity  and  happy  Saturday 
nights  to  the  fireside  of  all  the  people. 

Permit  me  to  mention  a  few  incidents  brought  about  by  those 
panics  to  illustrate  the  condition  of  a  people  and  government 
suffering  from  the  slavery  of  conditions. 

During  the  panic  of  1784  the  woes  of  the  people  were  so  de- 
plorable and  our  young  government  was  in  such  danger  that 
Washington,  writing  to  Col.  Humphrey  on  the  calamity  of  that 
day,  cried  out :  "For  God's  sake  tell  me  what  is  the  cause  of  these 
commotions?  *  *  *  It  is  but  the  other  day  that  we  were 
shedding  our  blood  to  obtain  the  constitution  under  which  we 
now  live — a  constitution  of  our  own  choice  and  making — and 
now  we  are  unsheathing  the  sword  to  overturn  it."  Of  the  panic 
of  1820  Benton  wrote  it  was  "a  period  of  gloom  and  agony." 

During  the  panic  of  1837  labor  was  a  lost  art,  corn  was  burned 
for  fuel,  the  people  were  fed  at  public  soup  houses,  the  states  could 
not  pay  interest  on  the  public  debt,  and  this  now  mighty  nation 
could  not  then  borrow  $10,000,000  at  any  interest  at  home  or 
abroad.  During  the  panic  of  1857  the  people  were  idle,  wages 
dropped  down  to  the  European  standard,  government  revenues 
fell  short  $90,000,000,  and  the  government  paid  as  high  as  36 
per  cent  for  the  use  of  money  to  keep  the  machinery  in  motion. 

You  can  place  your  ears  to  the  ground  and  yet  hear  the  dying 
wail  of  the  groans  and  agony  of  the  people's  suffering  from  the 
panic  of  1893.  During  each  of  those  panics,  as  in  the  last  one, 
it  was  utterly  impossible  to  keep  gold  within  the  control  of  the 
nation.  Between  the  dates  of  those  free  trade  periods  in  the  his- 
tory of  our  country,  protection  controlled  the  destinies  of  our  in- 
dustries, during  which  years  all  was  joy,  ease  and  contentment; 
it  may  be  said,  in  the  Scripture  phrase,  of  those  protection 
periods,  "The  hills  and  the  valleys  sang  with  joy."  During  free 
trade  we  were  the  slaves  of  conditions,  during  protection  we  were 
the  freemen  of  liberty. 

I  ask  as  a  pertinent  question,  if  we  are  to  fight  the  evils  of 
trusts,  whatever  they  may  be,  which  of  the  above  conditions 

179 


shall  govern  our  welfare  while  the  fight  is  going  on?  That  of  the 
slavery  of  conditions,  or  that  of  well  paid  freemen,  working  be- 
neath the  canopy  of  universal  national  prosperity? 

The  free  traders  are  now  attacking,  with  all  their  forces,  the 
tin  industry,  that  being  the  last  industry,  which  in  a  most  won- 
derful manner,  through  protection,  was  lifted  bodily  over  into  our 
country  from  England.  The  true  inwardness  of  those  attacks  may 
be  gleaned  from  the  statement  of  Mr.  Holt,  of  the  New  England 
Free  Trade  League.  He  said  "that  the  tariff,  by  shielding  our 
manufacturers  from  foreign  competition  makes  it  easy  for  them  to 
combine."  The  fact  that  the  foreigners  have  lost  their  hold  on 
our  market  is  where  the  shoe  pinches,  and  explains  why  free  trad- 
ers have  so  suddenly  become  such  violent  opponents  of  trusts. 

Mr.  Holt  speaks  correctly  when  he  says  that  the  protectionists 
point  with  pride  to  the  victory  of  the  American  tin  plate  indus- 
try. Never  in  the  history  of  nations  was  there  such  a  peaceful 
industrial  victory  achieved  as  that  of  the  transfer  of  the  tin  in- 
dustry from  England  to  the  United  States  in  the  last  nine  years, 
and  upon  that  victory  and  the  reduction  of  the  price  of  tin  to  the 
consumer  the  protectionists  might,  if  needs  be,  rest  all  their 
laurels.  The  assertions  of  those  modern  Don  Quixote  tariff  fight- 
ers that  the  tariff  is  the  mother  of  trusts  becomes  a  doubtful  state- 
ment in  the  presence  of  the  fact  that  the  Standard  Oil  and  sew- 
ing machine  combinations,  the  two  most  powerful  trusts  in  the 
country,  have  no  interest  in  the  tariff,  and  those  industries  are  not 
in  existence  by  reason  of  the  influence  of  the  tariff. 

The  perpetual  cry  of  the  free  traders,  and  repeated  in  all  its 
moods  and  tenses  on  this  platform  by  Mr.  Holt,  that  the  tariff 
is  added  to  price  paid  by  the  consumer,  that  the  tariff  is  a  tax, 
that  the  tariff  does  not  raise  wages,  and  that  the  tariff  is  a  mother 
of  trusts,  is  answered  fully  by  the  results  of  protection  upon  the 
tin  industry,  now  safely  housed  under  the  American  flag. 

In  1873,  when  we  had  no  tin  factories  in  this  country,  the 
American  people  paid  for  coke  grade  tin  $12  per  box,  charcoal 
grade  tin  $14.75.  About  1875,  some  Welshmen  who  understood 
the  tin  business,  under  the  stimulus  of  a  tariff  of  1.1  cents  per 
pound,  started  email  works  at  Wellsville,  Ohio,  Leachburgh  and 
Dernier,  Pennsylvania.  When  those  factories  were  ready  to  put 
their  product  on  the  market  the  British  tin  trust  at  once  dropped 
their  prices  down  to  $5.18  and  $6.25  per  box,  and,  of  course,  wiped 
out,  in  short  order,  the  capital  of  the  much  derided  infant  tin 
industries  of  the  patriotic  Welshmen,  after  which  prices  again 
went  up,  and  from  that  period  until  the  much  abused  McKinley 
tariff  went  into  force,  we  did  not  manufacture  a  pound  of  tin  in 

180 


this  country,  during  which  time  we  had  to  pay  such  prices  for  tin 
as  the  foreigners  deemed  it  wise  to  charge. 

During  that  period  we  paid  to  foreigners  from  twenty  to  thirty 
millions  of  dollars  per  year  for  our  tin,  but  the  McKinley  tariff  put 
a  protective  duty  on  foreign  tin  and  by  reason  of  that  duty 
American  capital  invested  in  tin  mills  and  commenced  producing 
until  we  have  grown  to  such  dimensions  that  American  factories 
now  supply  the  entire  consumption  of  the  country.  Let  us  com- 
pare the  results : 

1873,  no  American  factories,  price  of  foreign  tin  per  box, 
$12  and  $14.75. 

1892,  one  half  consumption  supplied  by  home  factories,  price 
$5.35. 

1898,  entire  consumption  supplied  by  home  factories,  price 

<£9  7^ 
$«.  lO. 

Amount  of  money  paid  by  American  people  to  foreign  fac- 
tories per  year,  when  we  had  no  tin  industry,  twenty  to  thirty 
million  dollars. 

Amount  paid  now  that  the  tin  industry,  through  protection, 
is  domesticated,  practically  none. 

In  1897  there  were  200  tin  mills  in  this  country,  with  a  capital 
of  $33,836,782,  employing  40,000  workmen  and  paying  wages 
from  75  cents  (boys)  to  $8.00  per  day.  Eighty  per  cent  of  the 
capital  employed  in  the  tin  industry  go  into  wages  and  we  pay 
from  two  to  three  times  higher  wages  than  are  paid  in  England 
for  the  same  class  of  workmen.  Were  it  not  for  protection,  not  a 
dollar  of  those  wages  would  be  paid  to  American  workmen,  not  a 
dollar  of  American  capital  would  be  employed  in  the  tin  in- 
dustry and  the  American  consumer  would  in  all  probability  be 
yet  paying  the  old  high  prices  for  tin.  The  price  of  tin  is  now 
$4.65.  I  am  informed  it  can  be  accounted  for  by  the  wave  of  pros- 
perity that  has  increased  the  consuming  powers  of  the  home  mar- 
ket, increased  the  price  of  raw  material,  and  increase  of  wages 
and  employment  over  that  of  the  late  panic  years.  Even  wheat 
lias  risen  fifty  per  cent  in  price  since  prosperity  has  again  shed  its 
happy  rays  on  our  country,  and  our  free  trade  friends  cannot 
charge  the  increased  price  of  wheat  to  a  trust. 

The  fact  that  it  is  the  foreign  manufacturers  who  are  always 
spending  their  money  and  sending  agents  into  our  country, 
agitating  for  the  repeal  of  the  tariff,  should  convince  all  thinking 
citizens  who  it  is  that  pays  the  duty.  If  the  American  consumer 
pays  it,  why  should  the  foreigner  spend  his  money  to  relieve  us? 
"Beware  of  the  Greeks,  even  when  they  come  with  presents." 

The  history  of  the  transfer  of  the  tin  industry  to  this  country 

181 


is  but  a  repetition  of  the  results  of  protection  in  its  influences 
in  the  transfer  of  nearly  all  our  industries  from  Europe,  and  there 
is  not  a  single  article  among  the  thousands  that  go  to  supply  the 
needs  of  the  American  people  which  cannot  now  be  purchased 
vastly  cheaper  than  they  could  when  we  depended  upon  Europe 
for  our  supply.  Even  sugar,  which  is  yet  a  revenue  product,  can 
be  purchased  for  a  third  of  what  it  could  in  the  fifties.  These 
facts  should  convince  the  people  of  this  country  that  protection 
is  the  guardian  of  our  prosperity  and  free  trade  is  the  poisoned 
dagger  that  foreign  trusts  continually  aim  at  the  vitals  of  our 
industries,  for  which  reason  you  find  the  free  trade  agents,  who 
spoke  to  you  from  this  platform,  ignoring  all  recommendations,  of 
regulation  through  American  law  and  crying  out:  "The  heart 
of  the  trust  problem  is  in  our  tariff  system  of  plunder.  The 
quickest  and  most  certain  way  of  reaching  the  evils  of  trusts  is  not 
by  direct  legislation  against  them  or  by  constitutional  amend- 
ment, but  by  the  abolition  of  the  tariff  duties."  Pray  what  ef- 
fect will  the  abolition  of  the  tariff  duties  have  on  the  sewing  ma- 
chine, the  Standard  Oil  and  other  trusts  with  which  the  tariff 
has  no  relation?  Past  experience  clearly  points  out  that  those 
people  who  now  ask  us  to  abolish  our  tariffs  are  not  interested  in 
crushing  trusts,  but  they  are  anxious  to  destroy  our  industries  and 
our  prosperity  in  the  interest  of  foreign  manufacturers. 

But,  say  bur  free  trade  friends,  if  we  can  sell  cheaper  than  the 
foreigner  why  continue  the  tariffs?  For  the  very  same  reason 
that  we  do  not  destroy  our  government  in  times  of  peace,  or  re- 
move the  side  walls  of  our  houses  in  summer  time.  We  know 
war  and  winter  are  liable  to  come,  so  we  retain  our  government 
and  the  side  walls  of  our  houses.  Experience  has  taught  us  that 
the  war  of  industry  is  liable  to  come,  hence  we  continue  pro- 
tection. 

The  seeping  of  ^a,  few  gallons  of  water  through  a  muskrat  hole 
in  the  Mississippi  levee  is  more  dangerous  to  the  welfare  of  the 
people  living  in  the  lowland  than. the  millions  of  tons  of  water 
that  flow  by.  Open  a  muskrat  hole  in  the  tariff,  as  those  agents  of 
foreign  factors  and  would-be  haters  of  trusts  ask  us  to  do,  and  their 
employers,  the  foreign  manufacturers,  would  swoop  down  on  that 
opening,  and  Johnstown  flood  like,  they  would  undermine  the 
foundations  of  our  industries  and  sweep  us  into  another  panic. 
A  10  per  cent  reduction  of  our  tariffs  brought  on  the  panics  of 
1837,  1857,  1873,  and  a  promise  of  a  reduction  brought  on  the 
panic  of  1893. 

A  few  illustrations,  out  of  the  hundreds,  will  show  what  we 

182 


have  lost  through  free  trade  and  what  we  have  gained  through 
protection. 

In  1850  we  numbered  twenty-three  millions  of  people.  We  had 
just  got  control  of  the  Pacific  coast.  Our  flag  kissed  two  oceans 
and  welcomed  all  lovers  of  liberty  to  our  shores.  California  gave 
us  $1,100,000,000  in  gold  just  for  picking  it  up.  The  Crimean 
war  and  European  conditions  gave  us  a  plethoric  market  for  our 
bounteous  crops.  Peace  and  health  prevailed.  Providence  poured 
blessings  beyond  number  upon  us  during  that  decade,  but  the 
madness  of  political  insanity  controlled  our  lawmakers,  hence  we 
reaped  thistles  instead  of  fruit. 

The  Walker  tariff  became  a  law  in  1846  and  struck  such  a  blow 
at  our  industries  that  it  paralyzed  all  our  energy.  The  1856  tariff 
was  the  last  straw  that  turned  the  gifts  of  Providence  and  all  our 
wonderful  wealth  making  conditions  into  dead  sea  fruit.  What 
were  all  these  opportunities  given  to  us  for?  History  has  recorded 
the  hell  of  war  we  passed  through  soon  after  that  period.  *  Was  it 
to  aid  us  in  preserving  this  Republic?  Was  it  to  strengthen  our 
souls;  for  the  atonement  for  the  crime  of  slavery?  Whatever  it  was, 
man's  unwisdom  put  them  aside.  At  the  close  of  that  providen- 
tial decade  this  nation  was  poor  indeed.  Free  trade  had  destroyed 
our  industries  and  sent  all  the  California  gold  to  Europe  to  pay 
for  foreign  goods.  If  we  were  wise,  protected  and  developed  our 
industries  during  that  decade,  that  $1,100,000,000  gold  would 
have  remained  with  us  and  made  a  financial  basis  of  $36.66  per 
capita,  which  with  cur  increased  industries  would  long  ere  this 
have  made  us  the  commercial  clearing-house  of  the  world.  Our 
gold  went  to  Europe  and  she  now  occupies  that  position.  Hence, 
I  assert,  the  crime  of  the  centuries  was  perpetrated  against  this 
Republic  in  that  decade  by  the  sectional  madness  of  our  legisla- 
tors who  threw  a  bombshell  of  unwise  legislation  in  the  midst 
of  our  industries,  dissipating  the  rich  conditions  that  poured  on 
our  country  at  that  time,  conditions  that  may  not  again  happen 
in  ages. 

At  the  close  of  President  Buchanan's  administration  we  num- 
bered over  30,000,000  people,  yet  so  poor  were  we  that  the  govern- 
ment then  paid  36  per  cent  for  the  use  of  money,  and  after  twelve 
years  of  peace  and  agricultural  plenty,  there  was  a  deficit  in  the 
revenues  of  $90,580,873.  That  was  during  free  trade,  when  the 
highest  expenditures  of  the  government  were  only  $45,000,000  a 
year.  From  1861  to  1865  was  a  period  of  destructive  war,  which 
removed  for  the  time  being  ten  millions  of  taxpayers.  During 
that  war  our  expenditures  were  $2,000,000  per  day.  But  then  it 
was  also  an  era  of  protection  and  industrial  activity,  during  which 

183 


four  and  a  half  years,  the  twenty  millions,  who  remained  faithful 
to  the  Union,  paid  into  the  United  States  Treasury  $4,753,811,- 
777.74.  I  wish  to  specially  direct  your  attention  to  those  two 
events,  illustrating  the  helplessness  of  a  people  living  under  the 
slavery  of  conditions  arising  from  free  trade,  and  the  wealth- 
creating  power  and  freedom  of  that  same  people  living  under 
the  conditions  which  arise  from  protection.  I  wish  to  emphasize 
the  fact  that  every  dollar  of  that  sum  was  paid  by  the  people  of 
this  country.  Some  persons  are  under  the  impression  that  Europe 
loaned  us  some  of  that  money.  Not  one  dollar  until  the  Union 
proved  its  stability. 

Mr.  Fessenden,  Secretary  of  the  Treasury,  commenting  on  this 
suhiect,  in  his  message,  1864,  said: 

"This  nation  has  been  able  thus  far  to  conduct  a  domestic 
war  of  unparalleled  magnitude  and  cost  without  appealing  for 
aid  to  any  foreign  people.  It  has  chosen  to  demonstrate  its  power 
to  put 'down  an  insurrection  by  its  own  strength,  and  furnish  no 
pretense  for  doubt  of  its  entire  ability  to  do  so,  either  to  domestic 
or  foreign  foes.  The  people  of  the  United  States  have  felt  a  just 
pride  in  this  position  before  the  world.  *  *  *  After  nearly 
four  years  of  a  most  expensive  war,  the  means  to  continue  it  seem 
apparently  un diminished,  while  the  determination  to  prosecute 
it  with  vigor  to  the  end  is  unabated." 

When  this  nation  entered  into  that  war  we  had  no  army,  no 
ships,  no  money,  no  credit,  comparatively  speaking  no  factories. 
During  the  war  we  equipped  2,778,304  soldiers,  built  700  ships  of 
war,  expended  $6,000,000,000  in  suppressing  the  rebellion.  When 
we  got  through  we  were  richer  than  when  we  commenced.  Pro- 
tective tariff  was  the  ally  that  aided  the  brain  and  brawn  of  this 
nation  to  produce  such  marvelous  results. 

Thus  it  will  be  seen  that  protection  is  a  law  which  creates  ari 
economic  condition  that  employs  land  and  labor  in  active  pro- 
duction, establishing  in  our  country  centers  of  industrial  activity 
which  bring  forth  wealth,  good  money,  prosperity,  national  pow- 
er, individual  happiness,  education  and  higher  civilization.  Such 
results  do  not  create  injurious!  trusts,  but  free  traders  coolly  come 
before  us  and  ask  us  to  abolish  all  these  because  a  few  men  among 
our  people  would  imitate  the  selfish  class  of  Europe  by  establish- 
ing trusts  in  our  midst.  To  take  this  advice  would  be  as  sensible 
as  stopping  the  circulating  of  the  blood  for  the  purpose  of  curing 
a  boil  on  one's  neck. 

Tinkering  with  the  economic  conditions  of  a  great  industrial 
nation  is  a  serious  matter.  The  ups  and  downs  of  our  industrial 

184 


history  emphasize  most  forcibly  what  ^ir  TTely  Hutchinson  wrote 
on  that  subject  one  hundred  years  ago: 

"Compare  this  period  with  the  former  and  you  will  prove  this 
melancholy  truth,  that  a  country  will  sooner  recover  from  the 
miseries  and  devastations  occasioned  hv  war,  invasions,  rebellion, 
massacre,  than  from  laws  restraining  the  commerce,  fettering  the 
indn«trv.  nnd  above  all  breaking  the  spirit  of  the  people." 

Tn  1892  we  were  in  a  very  healthy  industrial  and  monetary 
condition.  A  five  line  free  trade  plank  in  the  platfoinn  of  one  of 
our  political  parties  brought  on  the  panic  of  1893  that  cost  the 
nation  more  than  it  cost  to  put  down  the  rebellion. 

From  1862  to  1892,  with  the  exception  of  six  years,  was  a 
period  of  protection,  during  which  period  we  brought  into  ex- 
istence more  original  wealth  than  the  entire  wealth  of  England, 
and  enough  of  wealth  to  purchase  all  the  lands,  houses,  ships  and 
personal  property  of  Germany.  The  bringing  into  existence 
that  vast  sum  in  one  generation  and  controlled  by  our  people,  who 
are  human  like  the  rest  of  mankind,  developed  the  spirit  of  an 
Alexander,  who  sighed  for  more  worlds  to  conquer.  To  be  rich 
beyond  precedent  is  a  craze,  species  of  insanity.  Insanity  is  not 
held  responsible  by  God  or  man,  but  it  is  subject  to  IRW.  Give 
the  people  time  and  if  trusts  prove  to  be  against  the  interest  of  the 
majoritv,  the  law  will  harness  them  to  the  people's  interest,  not 
bv  killing  the  goose  that  laid  the  golden  eggs,  but  by  regulating 
and  correcting  the  evil.  Tn  the  last  generation  we  had  as  for- 
midable and  healthy  a  trust  in  this  country  as  ever  filched  the 
sweat  of  the  poor  man  to  enrich  the  rich.  It  was  a  trust  that 
made  a  door  mat  of  our  Constitution,  it  controlled  the  political 
independence  of  a  majority  of  the  people  of  this  country,  it  used 
the  stars  and  stripes  as  a  defender  of  the  slave  barracoon.  But 
when  the  conscience  of  the  American  people  was  awakened  the 
slave  trust  went  to  the  grave  of  the  dead.  It  cost  money  and 
life.  Yes,  and  that  is  the  best  evidence  that  the  American  people 
will  not  permit  any  combination  to  interfere  with  the  mission  of 
the  Republic. 

To  the  men  who  would  create  trusts  T  would  say  you  are  es- 
tablishing the  most  gigantic  schools  of  socialism  the  wcrld  has 
ever  known.  If  a  few  men  can  run  all  the  industries  why  cannot 
the  government  run  them  more  eauitablv  in  the  interest  of  the 
people?  That  is  the  lesson  the  trusts  will  teach  the  people,  the 
all  powerful  people,  who  through  the  ballot  box  are  peaceful! v 
revolutionizing  governments  every  year.  The  people  of  the  south 
tried  the  experiment  of  free  trade,  and  as  a  result  for  a  generation 
they  have  been  bleeding  at  every  pore.  Previous  to  the  Revolu- 

185 


tion  they  understood  the  principle  of  diversified  industries,  and 
then  that  part  of  our  country  controlled  the  centers  of  industrial 
activity.  After  the  Eevolution  cotton  became  king,  and  they 
deemed  it  necessary  to  marry  free  trade  to  slavery,  while  New 
England  and  the  Middle  States,  recognizing  the  coming  events, 
laid  the  foundation  for  diversified  industry  in  their  midst,  with 
the  result  that  in  fifty  years  thereafter  the  center  of  industrial 
activity  was  transferred  to  the  north,  and  the  people  of  the  south 
had  to  come  north  to  find  a  market  for  their  raw  produce  and  to 
borrow  money,  even  though,  as  Benton  says,  the  south  in  the 
meantime  had  exported  raw  products  to  the  amount  of  $800,000,- 
000,  a  sum  equal  to  the  product  of  the  Mexican  mines  since  the 
days  of  Cortez. 

Six  years  ago  we  entered  into  one  of  those  free  trade  eras  and 
expatriated  our  industries,  our  people  were  idle,  banks  and  busi- 
ness houses  toppled  over  like  rows  of  bricks,  commercial  credit 
was  wiped  out  as  if  the  safeguards  of  civilization  had  been  abol- 
ished. No  talk  of  trust  then  except  the  trust  of  poverty,  and 
protection  could  say,  "Point  not  thy  gory  fingers  at  me."  You 
all  remember  what  a  terrible  time  we  had  trying  to  keep  $100,- 
000,000  gold  reserve  in  the  Treasury.  Officials  and  business  men 
sat  up  nights  and  generally  became  nervous  over  that  fund,  but 
it  would  not  stay.  All  the  power  and  influence  of  this  govern- 
ment and  people  with  $70,000,000,000  of  wealth  could  not  keep 
that  small  sum  in  the  Treasury.  $250,000,000  gold  was  borrowed 
and  imported,  but  it  would  return  to  the  source  of  confidence, 
centers  of  industrial  activity,  where  we  had  expatriated  our  in- 
dustries. The  people  changed  the  government.  An  American 
tariff  was  passed.  Presto!  the  smokestacks  signaled  the  work- 
men to  their  benches,  and  gold,  as  if  some  living  thing,  heard  the 
click  of  the  anvil  and  came  over  here  in  such  quantities  that  we 
have  to  cry,  "Hold,  enough!"  and  a  late  report  shows  that  we 
have  in  this  country  $1,000,000,000  in  gold,  a  greater  quantity 
than  any  other  nation.  With  such  an  object  lesson  before  us 
would  it  not  be  wise  to  look  before  we  take  the  advice  of  free  trade 
doctrinaires,  because  a  few  unpatriotic  and  selfish  men  have  crept 
into  the  temple  and  seek  to  grasp  the  people's  interests  through 
the  agencies  of  trusts?  No!  let  us  rather  follow  the  example  of 
Christ — whip  them  out  who  would  make  our  temple  dens  of 
thieves.  Do  not  unwisely  pull  the  teninles  down,  but  let  our 
fountains  of  wealth  continue  to  flow,  as  they  now  are  flowing, 
since  we  have  tanped  prosperity  through  the  magic  of  protection, 
and  in  nil  our  political  thought  let  us  consider  the  source  and  ob- 
ject. Ond.  country,  home.  Then,  T  am  satisfied,  we  will  not  kill 

186 


protection  for  the  sake  of  curing  a  wart  on  its  face,  and  under  the 
same  principle  of  political  economy,  we  will  go  on  enriching  the 
people  and  nation  until  we  will  have  imbibed  the  spirit  of  the 
higher  law  and  learn  THAT  WEALTH  is  A  GUAKDIANSHIP,  EDUCA- 
TION A  MINISTRY,  AND  THE  CAPTAINS  OF  INDUSTRY  FATHERS  TO 
GUIDE  THE  MASSES  TO  HIGHER  CONDITIONS. 


THOMAS  UPDEGKAFF. 

Ex-Member  Congress,  Iowa. 

Thomas  TJpdegraff,  of  Iowa,  said : 

It  is  said  that  nothing  on  earth  is  so  utterly  useless  that  it 
will  not  be  thought  of  some  use  once  in  seven  years.  It  is  just 
seven  years  since  the  atmosphere  of  the  whole  United  States  was 
agitated  with  the  free  trade  shibboleths  we  have  just  heard  from 
this  platform.  Deceptive  as  they  have  proved  in  the  past  by 
actual  experience,  it  was  to  be  hoped  they  would  not  be  resur- 
rected here. 

I  am  not  going  into  a  speech  here  in  favor  of  protection.  It 
is  too  late.  I  shall  speak  only  of  protection  as  it  affects  trusts. 
If  the  experience  of  the  American  people  during  the  last  seven 
years  has  not  taught  them  better  than  the  doctrines  that  have 
just  been  read  from  this  stand,  then  God  help  them!  The  ob- 
ject lesson  has  not  been  forgotten,  and  whoever  now  raises  his 
voice  before  an  American  audience  for  free  trade  labors  in  vain. 

The  head  of  the  trust  that  is  taking  more  money  out  of  the 
pockets  of  the  people  than  any  other  has  been  introduced  as  a 
witness  here,  and  he  testifies  on  his  "honor  and  conscience"  that 
the  tariff  is  the  mother  of  trusts.  I  thought  the  witness  was 
smarting  a  little  with  resentment  because  the  protectionists  had 
not  given  him  enough  in  their  last  tariff  bill.  If  the  tariff  were, 
in  truth,  the  mother  of  his  trust  it  is  not  likely  he  would  have 
rushed  voluntarily  into  so  savage  a  denunciation  of  her  char- 
acter. 

That  great  aggregations  of  capital  have  wrought  incalculable 
public  good  is  not  denied.  A  monopolistic  trust  I  stand  against ; 
an  aggregation  of  capital,  however  large,  properly  managed,  I 
approve.  As  was  said  a  few  moments  ago  by  the  gentleman  who 
preceded  me:  It  is  only  a  fool  who  kills  the  goose  that  lays 
daily  the  golden  egg.  We  will  not  give  up  the  tariff;  if  it  be 
in  any  sense  the  mother  of  trusts,  we  will  save  the  mother  and 
raise  her  children  in  the  nurture  and  admonition  of  the  Lord. 

187 


Did  any  one  ever  see  rich  and  fertile  lands  without  weeds  ?  What 
do  sensible  people  who  have  rich  and  fertile  soil  do?  Do  they 
abandon  it  because  of  the  weeds  and  go  to  raising  grain  among 
the  rocks  of  New  England?  Do  they  not  rather  kill  the  weeds 
and  save  the  soil? 

It  has  been  said  there  never  was  a  paradise  without  snakes. 
Protectionists  would  kill  the  snakes  and  save  the  paradise.  Free 
traders  in  America  would  devastate  the  paradise  and  save  the 
snakes. 

That  there  are  abundant  and  sufficient  remedies,  within  con- 
stitutional limits,  for  all  the  evils  arising  from  those  trusts  or 
combinations  which  seek  to  extinguish  competition  and  fix  prices 
is  not  to  be  doubted.  That  the  public  good  arising  from  greatly 
cheapened  production  attainable  by  great  combinations  may  be 
saved,  is  equally  clear.  This  is  the  work  to  be  done.  Whenever 
the  American  people  have  been  sufficiently  aroused  and  take  the 
work  earnestly  in  hand  it  will  be  accomplished.  The  party  which 
hesitates  may  be  lost;  but  we  shall  ultimately  save  whatever  is 
good  in  aggregations  of  capital  and  control  whatever  is  bad. 


HORATIO  W.  SEYMOUR. 

Publisher^Chicago  Chronicle. 

Horatio  W.  Seymour  discussed  "Excessive  Financial  Energy/' 
and  said : 

The  trusts  or  combinations  which  should  be  destroyed  and 
which  can  be  destroyed  are  those  which  exist  by  reason  of  the 
protective  tariff  or  which  could  not  exist  if  there  were  no  pro- 
tective tariff,  and  those  which  either  in  their  organization  or  in 
their  methods  since  organization  have  adopted  criminal  practices 
and  are  therefore  amenable  to  the  criminal  laws.  In  the  one  case 
there  is  need  of  the  repeal  of  unwise  and  unjust  legislation.  In 
the  other  there  is  need  of  the  enforcement  of  penalties  which  run 
against  individuals  hiding  behind  trust  organizations  as  well  as 
they  do  against  individuals  who  stand  upon  their  own  respon- 
sibility. 

These  are  simple  remedies,  and  the  wonder  is  not  that  they 
are  needed,  but  that,  being  needed,  they  are  not  applied.  The 
reason  is  to  be  found,  I  think,  in  a  certain  weakening  of  the  moral 
fibre  of  the  American  people,  partly  as  a  result  of  the  economic 
errors  which  have  been  inculcated  so  industriously  and  partly 

188 


in  response  to  the  tireless  propaganda  of  calumny  and  calamity 
which  has  become  in  a  manner  a  public  disease  affecting  injuri- 
ously the  entire  body  of  the  people. 

This  habit  of  complaint  is  something  more  than  mere  discon- 
tent. It  is  sullen,  despairing,  slothful  fault-finding,  which  quar- 
rels with  every  new  condition,  and  particularly  with  every  new 
manifestation  of  mechanical,  financial  and  commercial  energy. 
It  looks  upon  the  dark  side  of  everything.  It  corrects  no  evil 
because  it  represents  every  wrong  as  necessarily  incurable.  It 
is  pleased  with  nothing  that  does  not  in  some  manner  promise  a 
gratuity.  It  is  continually  asking  or  expecting  something  for 
nothing.  It  teaches  that  corruption  is  the  mainspring  .of  all  suc- 
cess, and  that  honest  effort  in  any  direction  is  hardly  worth  while. 
Its  existence  indicates  quite  clearly  that  the  development  of  great 
financial  energy  in  this  country  has  been  attended  by  a  decided 
loss  of  tone  on  the  part  of  the  people. 

The  supporters  of  the  protective  tariff  are  largely  responsible 
for  this  condition  of  affairs.  One  political  party  has  taught  prac- 
tically nothing  else  during  the  past  twenty-five  years.  Most  of 
our  political  campaigns  during  that  period  have  turned  upon  such 
selfish  pecuniary  interest  as  this  party  could  persuade  the  ma- 
jority of  the  people  that  they,  or  somebody  with  whom  they  were 
in  touch,  had  in  the  control  of  government  and  in  the  making  of 
the  laws.  The  indiscriminate  granting  of  pensions  and  the  sale 
of  franchises,  grants  and  other  special  privileges  by  municipalities 
have  also  done  much  to  fill  the  minds  of  the  people  with  wrong 
ideas  as  to  the  relation  which  they  hold  to  their  own  government. 

Trusts  need  not  be  more  objectionable  than  corporations  or 
sole  ownerships.  They  are  subject  alike  with  them  to  the  laws. 
If  they  violate  the  laws,  their  officers  may  be  punished.  If  they 
secure  advantages  under  unjust  laws,  purchased  in  their  interest, 
or  if  they  escape  the  penalties  of  wise  laws  enacted  to  prevent  and 
to  punish  crime,  it  is  certain  that  representatives  of  the  people  in 
office  have  betrayed  their  trust  and  would  have  done  it  as  quickly 
if  the  bribe  giver  had  represented  individuals  or  had  represented 
himself  alone. 

The  evil  to  be  intelligently  complained  of  and  redressed,  in 
the  first  instance,  therefore,  is  more  the  weakness  and  dishonesty 
and  heedlessness  of  many  of  the  people  and  their  agents  than  it 
is  the  rapacity  of  the  trusts.  There  is  not  an  unlawful  com- 
bination in  America  to-day  that  does  not  owe  its  existence  to  some 
unfaithful  representative  of  the  people.  There  is  not  one  that 
cannot  be  destroyed  in  short  order  by  an  honest  enforcement  of 
the  laws.  Those  trusts  or  nnmhinations  against  which  the  laws  do 

189 


not  run  are  no  more  to  be  decried  than  any  other  manifestation 
of  business  enterprise. 

Aside  from  such  trusts  as  might  have  had  a  dishonest  origin 
or  as  may  be  conducted  contrary  to  the  law,  the  great  mass  of 
these  combinations  will  stand  or  fall  exactly  as,  under  similar 
circumstances,  individual  enterprises  would.  If  conducted  wisely 
and  economically,  with  due  regard  to  public  rights  and  public 
opinion,  and  with  a  sagacious  comprehension  of  changing  condi- 
tions in  markets  and  methods  of  production  and  distribution,  they 
will  succeed  and  will  deserve  to  succeed.  If  inflated  at  the  start, 
dishonestly  managed,  and  conducted  without  a  decent  regard  to 
public  sentiment  and  public  rights,  they  will  go  to  ruin,  as  they 
will  deserve  to' do. 

Over-capitalization,  big  salaries  and  incompetent  manage- 
ment are  practically  certain  to  wreck  a  large  percentage  of  these 
trusts  in  the  course  of  a  few  years.  The  number  of  men  of  first- 
class  ability  who  might  be  able  to  manage  such  combinations  sat- 
isfactorily is  large  enough,  but  such  men  are  not  always  selected 
for  such  positions,  and  if  they  are  so  chosen  they  do  not  always 
have  the  power  necessary  to  bring  about  the  best  results. 

The  trust  exemplifies  in  a  broad  field  of  action  a  condition 
which  prevails  in  every  crossroads  village  throughout  the  civ- 
ilized world,  wherever  one  man  through  superior  industry,  skill, 
finesse  or  capital  may  have  gained  some  advantage  over  his  fel- 
lows. It  is  the  highest  expression  of  human  selfishness  as  applied 
to  business  affairs.  It  is  on  a  grand  scale,  exactly  the  same  thing 
that  every  man  of  enterprise  is  attempting  on  a  smaller  scale. 

Unlawfully  conducted,  the  trust  may  undertake  by  conspiracy 
to  restrict  trade,  to  destroy  competition  and  to  limit  "production, 
but  numberless  corporations  and  individuals  are  doing  some  of 
these  things  all  the  time,  and  have  been  doing  so  for  years.  The 
same  law  which  will  prove  sufficient  if  invoked  against  a  dis- 
orderly vendor  of  bananas  who,  by  main  force,  drives  away  a  com- 
petitor, will  be  potential,  if  honestly  enforced,  to  deal  with  every 
lawless  combination  of  capital. 

Before  instituting  prosecution,  however,  it  will  be  well  to  con- 
sider with  some  seriousness  the  fact  that  business  methods  in  this 
country,  whether  in  trade  unions  or  in  combinations  of  capital, 
are  not  wholly  idyllic.  The  man  who  undertakes  to  work  when  a 
trade  union  decrees  that  he  shall  not  work,  is  likely  to  have  his 
head  broken,  unless  society  bravely  and  honestly  comes  to  his 
defense,  as  it  should. 

The  weak  will  suffer  at  the  hands  of  lawless  trusts  in  the  same 
manner  until  society,  througrh  its  proper  agents,  comes  to  their 

190 


relief,  its  failure  to  do  so  is  due  to  the  popular  delusion  that 
lawless  trusts  present  a  new  phase  of  crime,  whereas  the  new  and 
novel  feature  that  they  present  is  the  ability  and  the  willingness 
to  corrupt  or  to  intimidate  the  people's  servants.  The  lawless 
trust  can  be  proceeded  against  as  easily  and  as  effectively  as  a 
lawless  individual  can  be,  and  it  would  be  so  proceeded  against 
were  it  not  for  its  corrupt  relations  with  politics  and  politicians. 

To  talk  about  new  laws  and  new  penalties  against  trusts  when 
those  now  in  existence  are  not  enforced,  and  when  it  is  not  even 
seriously  proposed  anywhere  to  enforce  them,  is  idle.  If  we  will 
not  or  cannot  enforce  the  laws  that  we  have,  it  is  hardly  worth 
while  to  ask  legislature  or  congress  to  enact  others.  This  amazing 
manifestation  of  official  dereliction  is  fittingly  supplemented  by 
the  despairing  and  discouraging  popular  cry  in  many  localities 
that  socialism — or  state  and  municipal  ownership,  as  it  is  now 
called — is  the  only  remedy  for  monopoly  and  extortion.  Incapa- 
city or  worse  in  the  officer  of  justice  and  abject  helplessness  in  the 
citizen  are  a  deplorable  combination  in  a  republic.  N"o  remedy 
that  can  be  proposed  will  reach  the  unlawful  trusts  until  this 
double  infirmity  shall  have  been  removed. 

Hence  the  problem  to  be  considered  in  connection  with  un- 
lawful trusts  and  combinations  is  not  so  much  one  of  undue  and 
criminal  financial  energy  as  it  is  of  deplorable  popular  and  official 
weakness.  As  a  result  of  the  appeals  of  ignorant  or  crafty  dema- 
gogues, who  lightly  assail  all  progress  and  all  prosperity,  and  the 
wretched  and  despairing  preachments  of  socialistic  agitators,  who 
find  no  remedy  for  any  ill  except  in  their  own  miserable  process 
of  leveling,  too  many  Americans  have  lost  sight  of  the  fact  that 
the  first  requisite  in  a  well  ordered  republic  is  a  self-reliant,  self- 
respecting  citizenship. 

It  is  not  remarkable  that  we  have  lost  some  sturdiness  of 
character  of  late,  for  we  have  pursued  many  false  ideas  as  zealous- 
ly as  we  formerly  adhered  to  the  wiser  ones.  Forty  years  of  pro- 
tective tariff  legislative  hypocrisy  and  deception  have  taught  the 
average  American  that  a  wise  man  before  entering  upon  any  im- 
portant enterprise  secures  a  favoring  law  or  privilege  or  franchise 
at  the  hands  of  government,  local,  state  or  federal. 

The  upholding  of  this  doctrine  has  educated  a  generation  of 
Americans  to  the  belief  that  there  is  nothing  discreditable  in  ask- 
ing and  accepting  public  assistance.  Imitating  our  conspicuous 
public  dependants,  the  tariff  beneficiaries,  we  find  in  every  walk 
of  life  that  beggary  is  becoming  a  great  profession,  followed  bv 
a  mighty  host  made  up  of  every  manner  of  man,  woman  and  child. 

In  addition  to  our  pension  roll  of  nearly  a  million  names,  we 

.191 


have  several  millions  of  workmginen  who,  with  their  families, 
have  been  taught  that  except  as  government  taxes  all  the  people 
for  the  benefit  of  their  employers,  they  cannot  hope  for  work  or 
wages.  We  have  also  a  propaganda  of  helplessness  and  imbecility 
carried  on  sometimes  in  the  name  of  democracy,  but  of  tener  out- 
side of  its  councils,  which  teaches  hostility  to  all  wealth  and  to 
individual  enterprise,  which  informs  the  young  falsely  and  ma- 
liciously that  every  avenue  of  promotion  ie  cloced  to  them  and 
which  oilers  no  remedy  for  existing  ills  save  the  enfeebling  and 
destructive  ones  which  are  to  be  found  in  socialism  and  anarchy. 

Under  such  conditions,  who  can  wonder  that  every  aggrega- 
tion of  capital,  no  matter  how  laudable,  is  viewed  by  many  Ameri- 
cans with  dissatisfaction  and  discontent,  or  that  defiant  lawless- 
ness on  the  part  of  some  of  the  rich  and  powerful  is  everywhere 
helplessly  ignored?  To  enforce  any  law,  public  sentiment  is 
needed.  To  maintain  a  republic  in  respectable  form,  it  is  neces- 
sary that  a  majority  of  its  citizens  shall  be  self-sustaining  men 
who  scorn  pauperism,  who  detest  robbery  of  every  description, 
and  who  have  sufficient  intelligence  and  individuality  to  detect 
and  repudiate  the  sophistry  of  socialism  as  well  as  to  meet  with 
proper  rebuke  the  fiercer  fanaticism  of  the  revolutionists. 

With  a  citizenship  honestly  and  wisely  inspired  and  officered 
there  would  be  no  more  reason  for  holding  a  conference  to  con- 
sider how  to  deal  with  lawless  trusts  than  there  would  be  to  as- 
semble a  mass  meeting  for  the  purpose  of  discussing  the  propriety 
of  enforcing  the  laws  against  housebreaking.  The  unlawful  trust 
would  be  punished  as  a  matter  of  course.  The  lawful  trust  would 
be  permitted  to  pursue  its  business  unhindered,  as  a  matter  of 
course. 

The  need  of  an  invigorating  tonic  in  American  political,  busi- 
ness and  social  life  is  very  great.  The  want  of  it  is  felt  on  every 
hand  where  senseless  agitation  merely  for  the  sake  of  agitation 
embitters  the  old  and  discourages  the  young,  where  the  corrupt- 
ing influence  of  the  dishonest  rich  finds  a  ready  response  on  the 
part  of  the  vicious  poor,  where  demagogues  mislead  the  idle  and 
careless,  and  where  designing  men  sow  the  seed  of  lawlessness 
and  perhaps  of  revolt. 

There  is  need  of  some  sturdy  response  to  the  numerous  irre- 
sponsible spokesmen  of  calamity  and  slander  who  have  the  floor 
at  all  seasons,  and  whose  influence  upon  the  thoughtfulness  and 
inexperience  is  far  reaching  and  dangerous.  There  is  need  in 
every  section  of  the  country  of  more  hopeful,  helpful  and  sug- 
gestive leadership  and  less  of  chronic  and  wholly  useless  lamen- 
tation. 

192 


Conditions  change  rapidly  in  these  days.  Public  intelligence 
and  virtue  must  and  will  keep  pace  with  them.  The  most  difficult 
problems  will  be  solved  quickly  by  a  people  actuated  by  rugged 
honesty,  common  fairness  and  a  desire  to  see  justice  done  for  the 
sake  of  justice.  The  world  grows  better  daily,  presenting  more 
opportunities  than  ever  before,  but  calling  all  the  time  for  greater 
intelligence  and  a  stronger  purpose  in  the  pursuit  thereof. 

The  American  republic  needs  a  tonic  of  sound  doctrine  for 
the  instruction  of  youth  and  for  the  admonition  of  the  aged, 
which  will  inculcate  the  wisdom  of  hope  and  the  folly  of  despair, 
which  will  show  that  no  abuse  of  power  is  too  deep  seated  for  cor- 
rection and  which  will  hold  ever  before  the  republic  the  countless 
shining  examples  of  success  achieved  not  as  a  result  of  jealousy 
of  and  slanderous  attacks  on  the  triumphs  of  others,  nor  by  rea- 
son of  despair  and  indifference  because  the  obstacles  to  be  sur- 
mounted seem  greater  than  formerly,  but  by  faithful  work  and 
indomitable  courage. 

One  immediate  and  wholesome  effect  of  such  a  tonic  would 
be  the  impartial  enforcement  of  wise  laws  against  all  offenders, 
the  strong  as  well  as  the  weak,  and  the  repeal  ^f  obviously  unwise 
laws,  regardless  of  the  protests  of  their  beneficiaries.  No  unlaw- 
ful trust  could  stand  for  a  day  in  the  face  of  a  public  sentiment 
so  actuated. 


SAMUEL  ADAMS  KOBINSON. 

American  Protective  Tariff  League. 

Samuel  Adams  Kobinson  said : 

We  are  to  suppose,  in  dealing  with  this  question,  that  those 
who  contend  that  "the  customs  tariff  is  the  mother  of  trusts/'  and 
that  the  surest  way  to  kill  the  child  is  to  kill  the  parent,  are 
sincere  in  that  contention.  In  taking  such  sincerity  for  granted 
we  are,  it  must  be  owned,  obliged  to  close  our  eyes  to  certain  evi- 
dences which  conflict  with  this  conclusion.  We  must,  for  ex- 
ample, ignore  the  eagerness  with  which  free-traders  have  sprung 
to  the  front  with  their  anti-protective  antidote  for  trusts,  while 
at  the  same  time  extending  to  the  trusts  the  consoling  reassur- 
ance that  it  is  not  the  trust,  but  the  protective  tariff,  whose  scalp 
they  (the  free-traders)  are  after.  Such  reassurance  was  not  long 
ago  conveyed  in  connection  with  the  published  announcement  of 
the  New  England  Free-Trade  League  of  its  arrangements  to 
secure  the  publication  of  a  series  of  articles  tending  to  show  that 

193 


it  is  to  the  protective  tariff  that  trusts  are  indebted  for  their  exist- 
ence primarily  and  their  survival  ultimately.  In  response  to  the 
gratifying  assurance  that  the  chief  concern  of  the  New  England 
Free-Trade  League  was  for  the  foreign  producer  and  not  for  the 
domestic  consumer  it  is  to  be  presumed  that  contributions  to  the 
publication  fund  from  trust  sources  were  not  altogether  lacking. 
They  should  not  be.  In  this  connection  let  us  note  a  curious 
fact,  namely,  that  while  demagogic  theorists  have  been  prompt 
to  suggest  the  removal  of  the  tariff  when  a  domestic  trust  has 
increased  prices,  there  is  no  recorded  instance,  I  believe,  of  these 
gentlemen  demanding  that  the  tariff  be  doubled  when  price-; 
have  been  increased  by  a  foreign  trust. 

Assuming,  however,  for  the  purpose  of  this  discussion,  that 
the  enemies  of  protection  are  also  the  enemies  of  trusts,  in  equal 
sincerity,  it  ought  to  be  plain  to  every  unbiased  mind  that  the 
remedy  for  trust  oppression  is  not  to  be  found  in  the  death  of 
domestic  competition.  At  least,  we  should  not  make  a  head- 
long rush  for  that  remedy  until  we  are  sure  that  it  is  the  right 
one.  Bather  let  us  be  wise  and  patient  and  inform  ourselves 
a?  to  the  precise  character  of  the  disease  before  attempting  to 
diagnose  and  prescribe.  When  we  shall  have  done  this  it  is  not 
impossible  that  the  trust  antidote  will  be  forthcoming  in  the 
shape  of  effective  laws  born,  not  of  guesswork  and  dogmatism, 
but  of  the  knowledge  gained  from  test  and  experience. 

If  experience  has  taught  anything,  it  has  taught  that  in  a 
country  such  as  ours,  with  its  limitless  latent  resources,  awaiting 
development,  you  cannot  pluck  the  fruit  of  prosperity  from  the 
tree  of  free-trade.  It  does  not  grow  there.  "Do  men  gather 
grapes  of  thorns,  or  figs  of  thistles?"  On  general  principles  the 
remedy  for  monopoly  is  not  the  limitation  of  internal  competi- 
tion. Gasoline  is  not  a  good  medium  for  fire  extinguishment. 
Free-trade  is  not  the  remedy  we  are  in  search  of,  unless  the 
people  of  the  United  States  are  prepared  to  enter  upon  an  experi- 
ment certain  to  overthrow  our  industries,  but  not  certain  to 
"smash  the  trusts."  So  I  say,  for  the  present : 

"Bather  bear  those  ills  we  have  than  fly  to  others  that  we 
know  not  of." 

Considered  in  the  light  of  logic  and  expediency,  the  present 
time  is  most  inopportune  for  striking  down  the  economic  policy 
which,  according  to  the  increasing  testimony  of  British  writers 
and  thinkers,  has  created  in  the  IJnited  States  the  great  manu- 
facturing industry  which  threatens  British  commercial  suprem- 
acy. American  free-traders  are  about  the  only  people  on  earth 
to-day  who  do  not  concede  this  to  be  a  fact. 

194 


Let  us  suppose  a  condition.  In  the  event  of  the  consolida- 
tion of  all  industries  into  trusts,  with  the  protective  tariff  for- 
ever removed,  and  with  its  removal  all  incentive  to  new  com- 
petitive enterprises  wholly  lacking,  does  any  one  suppose  that 
the  trusts  would  dissolve  and  their  constituent  companies  return 
to  unrestricted  competition  and  price  cutting  among  themselves? 
Would  they  surrender  to  foreign  competition  and  go  out  of  busi- 
ness entirely?  No  sane  person  could  for  a  moment  anticipate 
any  of  these  results.  On  the  contrary,  the  assured  prospect  of 
a  permanent  removal  of  protective  tariff  would  impel  every  indus- 
trial enterprise  in  this  country  now  operating  independently  to 
rush  for  shelter  into  a  trust  organization.  Domestic  competition 
would  be  at  an  end.  What  of  foreign  competition?  The  answer 
is  plain.  On  a  free-trade  basis,  and  with  the  certainty  that  no 
new  domestic  competition  could  arise  to  complicate  matters,  our 
industrial  captains,  being  absolute  masters  of  the  situation,  would 
not  surrender  the  home  market  to  foreigners,  but  would  make  a 
tremendous  fight  for  the  preservation  of  their  existence.  They 
would  fight  inside  the  limits  of  a  very  small  ring — the  ring  of 
reduced  prices  and  reduced  wages.  Prices  and  wages  must  come 
down  to  approximately  the  European  standard,  to  say  nothing 
of  the  Asiatic  standard.  No  use  for  American  wage  earners  to 
rebel,  for  you  must  remember  that  we  are  now  organized  on  a 
free-trade  basis  into  a  compact  national  trust  of  wage  payers,  and 
that  our  industrial  captains,  secure  through  free-trade  from  the 
menace  of  new  domestic  competition,  are  in  a  position  to  dictate 
the  rate  of  wages.  No  such  dictation  is  possible  in  the  presence 
of  such  open  and  unrestricted  domestic  competition  as  is  made 
possible  through  the  operation  of  the  protective  principle.  But 
in  the  condition  we  are  now  supposing,  protection  has  been  aban- 
doned and  free-trade  is  the  order  of  the  day.  The  industrial 
captains  are  organized  under  the  new  conditions,  not  the  old, 
and  they  will  know  how  to  handle  the  wage  question.  Having 
reduced  wages  and  lowered  the  cost  of  production,  we  are  thus 
in  shape  to  meet  foreign  competition.  We  can  control  the  great 
home  market,  and,  more  than  that,  we  are  able  to  realize  the 
free-trade  dream  of  underselling  the  rest  of  the  world  in  the 
markets  of  the  world.  To  be  sure,  we  have  reached  that  ideal 
(free-trade)  condition  by  a  sweeping  reduction  of  the  American 
wage  rate  and  a  corresponding  drop  in  the  American  standard 
of  living.  But,  no  matter,  we  have  got  there,  and  that  was  the 
main  consideration.  We  have  succeeded  in  bringing  about  a 
sweeping  reduction  of  prices  and  values,  and  have  done  it  at  the 
expense  of  the  American  workingman.  What  have  we  to  offer 

195 


the  lower  paid  wage  earner  in  the  way  of  compensation  for  his 
sacrifices?  A  lower  cost  of  living,  some  one  will  reply.  Yes,  we 
have  done  that,  to  some  extent,  it  may  be,  but  to  no  extent  that 
is  at  all  commensurate  with  the  loss  of  his  ability  to  earn,  buy 
and  consume.  He  is  still  the  loser  by  the  readjustment  of  things 
— a  terrible  loser,  I  think.  But  he  is  not  the  only  loser.  What 
of  the  general  body  politic?  Has  any  one  ever  figured  out  what 
it  would  mean  to  the  business  of  this  nation  of  seventy-seven 
millions  if  the  average  wage  rate  were  to  be  reduced  25  per  cent? 
To  express  such  a  result  would  require  so  many  ciphers  following 
a  unit  and  a  dollar  mark  that  I  shall  not  attempt  the  calculation. 
1  don't  like  to  imagine,  much  less  depict,  such  a  state  of  things, 
and  I  prefer  to  dismiss  this  appalling  aspect  of  the  question  with 
the  conclusion  that  it  cannot  and  will  not  come  to  pass. 

However,  we  have  brought  about  unrestricted  foreign  com- 
petition by  means  of  abolishing  protective  duties,  and  we  have 
"smashed  the  trusts/'  But  have  we  smashed  the  trusts?  Have 
we  not  given  them  a  new  lease  of  life  by  the  removal  of  the  peril 
of  domestic  competition  outside  the  trusts?  Have  we  not  opened 
the  door  to  the  international  trust?  With  the  American  market 
closed  against  them  by  reason  of  a  lower  cost  of  production  in  this 
country,  and  with  American  competition  crowding  them  out  oi' 
the  world's  markets,  will  foreign  industrial  producers  lie  down 
and  give  up  the  fight?  Probably  not.  Being  already  familiar 
with  the  development  and  operation  of  the  trust  plan,  they  will 
naturally  undertake  the  arrangement  of  a  modus  vivendi,  and 
by  easy  stages  will  reach  a  modus  operandi,  with  the  all  powerful 
American  trust.  Behold  the  international  trust,  the  universal 
trust,  if  you  please.  It  is  not  an  impossibility.  It  is  not  even  an 
improbability.  It  is  a  certainty.  In  such  an  event  will  our  last 
state  be  better  than  our  first? 

1  have  said  that  in  the  altered  conditions  brought  about  by 
the  permanent  abolition  of  the  system  of  protection,  the  trust 
would  find  its  operations  facilitated,  not  hindered.  Hard  time- 
are  the  best  times  for  trusts.  It  is  then  that  profits  are  smallest 
and  that  combination  is  easiest.  In  good  times  the  problem  i* 
not  so  simple,  for  it  is  complicated  by  the  alertness  with  which 
capital  seeks  employment  in  new  ventures  and  by  the  active  com- 
petition in  all  productive  lines,  which  is  a  natural  consequence  of 
such  activity  in  the  employment  of  capital. 

Tin  plate  has  been  selected  as  a  bright  and  shining  mark,  a 
conspicuous  target  for  the  shafts  of  those  who  while  pretending 
to  aim  at  trusts  direct  their  volleys  at  protection.  Tin  plate  i5 
indeed  a  bright  and  shining  mark,  for  it  is  the  most  recent  and 

196 


hence  the  most  notable  exemplification  of  the  practical  workings 
of  a  policy  which  establishes  industries  by  means  of  guaranteeing 
a  stable  market  for  their  products.  It  also  happens  that  the  tin 
plate  trust  is  the  most  conspicuous  one  among  the  trusts  whose 
products  enjoy  the  benefits  of  a  protective  tariff  which  has  in  any 
notable  degree  advanced  its  prices.  It  is  not  my  purpose  to  de- 
fend or  apologize  for  this  action  on  the  part  of  the  manufacturers 
of  tin  plate,  but  rather  to  inquire  into  the  facts  with  a  view  to 
arriving  at  an  intelligent  conclusion  as  to  the  merits  of  the  ques- 
tion. I  find,  to  begin  with,  that  the  difference  between  the  pres- 
ent price  of  American  tin  plate  and  the  price  of  Welsh  tin  plate 
laid  down  in  this  country,  duty  paid,  is  very  much  less  than  the 
duty  of  1-|  cents  per  pound.  Eecent  quotations  for  tin  plate  in 
Wales  for  export  are  16  shillings  per  box  of  108  pounds,  while  the 
price  in  the  United  States  is  $4.52|  per  box  of  108  pounds.  The 
Welsh  price  is  equivalent  to  $3.89  in  United  States  money.  This 
price  is  subject  to  discounts  for  cash  of  3  and  1  per  cent,  and  a 
brokerage  of  2  per  cent  is  customarily  paid  to  the  foreign  broker 
for  buying  the  plates  and  inspecting  them,  so  that  the  net  price 
would  be  practically  2  per  cent  less  than  $3.89,  or  $3.81.  To  this 
must  be  added  15  cents  for  ocean  freight  and  insurance,  making 
the  price  in  bond  in  New  York  $3.96.  The  duty  on  108  pounds, 
at  l|  cents,  is  $1.62,  making  the  price  on  dock  in  New  York,  duty 
paid,  $5.58.  While  foreign  plates  would  cost  in  New  York  $5.58, 
American  plates  are  costing  at  mill  $4.52-|,  or  $1.05^  less.  The 
price  of  American  plates  at  mill  is  $0.56^  more  than  the  price 
of  foreign  plates  at  New  York,  before  the  duty  is  paid,  so  that 
under  present  conditions  just  about  one-third  of  the  duty,  or 
one-half  a  cent  a  pound,  is  actually  benefiting  the  American  tin 
plate  industry.  The  other  two-thirds  is  nominal.  It  should  be 
noted  that  the  comparison  made  is  not  as  favorable  a  one  as  might 
be  drawn,  because  the  principal  consuming  centers  of  the  United 
States  are  nearer  the  mills  than  they  are  to  New  York,  and  the 
freight  from  New  York  to  the  point  of  consumption  would  aver- 
age more  than  the  freight  from  mill  to  point  of  consumption. 
There  is  no  question  that  had  there  been  no  tin  plate  industry 
established  in  this  country,  Welsh  tin  plates  would  be  selling  at 
very  much  higher  figures  to-day.  The  Welsh  manufacturers  were 
securing  very  good  profits  out  of  the  American  trade  before  the 
McKinley  law,  from  the  absence  of  competition.  They  would 
have  continued  to  secure  such  profits  had  no  competition  arisen 
in  this  country,  while  the  demand  has  so  increased  that  were  there 
no  source  of  supply  but  the  Welsh  tin  mills,  there  would  have 
been  an  excess  of  demand  over  production  of  25  to  50  i>er  cent 

197 


at  the  present  time,  and  prices  would  without  doubt  have  been 
sent  much  higher.  It  would  be  the  height  of  folly  to  attempt  to 
deny  that  with  the  Welsh  manufacturers  retaining  a  monopoly 
of  the  American  demand,  their  prices  would  be,  not  $0.56^  higher 
than  they  are  now,  but  many  times  this  advance,  and  in  this 
case  free  Welsh  plates  would  cost  the  American  consumer  much 
more  than  American  plates  do  now.  The  American  tin  plate 
industry  is  to-day  indebted  to  the  tariff  for  but  about  one-third  of 
the  protection  it  nominally  offers,  and  it  requires  this  small  pro- 
tection only  because  Welsh  tin  plates  are  selling  much  lower  than 
they  would  be  selling  were  there  no  American  industry. 

The  advances  that  have  occurred  in  tin  plate  in  the  last  nine 
months  are  in  great  part,  if  not  wholly,  explained  and  justified 
by  the  advances  in  raw  material  on  the  one  hand,  and  the  in- 
creased demand  on  the  other.  That  such  influences  are  fully 
able  to  produce  still  greater  advances  is  shown  by  the  condition 
in  tank  plate,  which  early  last  year  sold  at  one  cent  a  pound  and 
b  now  selling  at  2f  cents  for  delivery  in  the  next  two  months,  an 
increase  of  175  per  cent,  as  against  an  increase  in  tin  plates  of 
less  than  70  per  cent,  from  $2.60  to  $4.37£  for  100  pound  cakes. 
With  a  very  few  exceptions,  iron  and  steel  products,  which  have 
no  trust  control  whatever,  and  on  which  the  duty  is  merely  nom- 
inal, have  advanced  much  more  than  have  tin  plates.  From 
August  1,  1898,  to  August  1,  1899,  the  standard  grade  of  tin 
plates  quoted  by  the  Treasury  Department  in  the  monthly  sum- 
mary of  the  Bureau  of  Statistics  increased  in  price  77  cents  a 
box.  In  the  same  period  the  same  grade  of  goods  in  Wales  in- 
creased $1.45  a  box,  and  that  foreign  increase  was  nearly  all  made 
in  1899.  In  other  words,  in  free-trade  England  tin  plates  in- 
creased twice  as  much  in  price  as  in  the  United  States  under  a 
protective  tariff. 

It  is  urged  in  behalf  of  tin  plate  manufacturers  that  they  had 
no  desire,  when  the  Dingley  bill  was  under  discussion,  to  see 
the  rate  of  duty  advanced,  and  it  is  a  fact  that  some  of  them  were 
actually  opposed  to  the  increase.  They  knew  that  the  advance 
would  not  secure  them  any  higher  prices  for  their  product,  and 
that  the  workmen  would  make  it  a  pretext  for  demanding  higher 
wages,  and  the  outcome  proved  that  they  were  right.  The  only 
tin  plate  lobby  was  that  of  the  Amalgamated  Association  of  Iron. 
Steel  and  Tin  Workers,  through  the  influence  of  which  the  duty 
was  advanced.  The  price  of  American  tin  plate  was  not  raised 
a  particle  by  the  increased  duty,  but  at  the  next  scale  settlement 
the  workers  demanded  an  advance  in  wages  on  the  strength  of 
the  higher  duty,  and  they  got  it.  Last  summer  they  demanded 

198 


another  advance,  and  they  got  that  also,  the  two  advances 
amounting  to  about  25  per  cent  over  the  wages  paid  under  the 
Wilson  law.  The  earnings  of  about  54,000  tin  plate  operatives 
have  been  affected  by  these  advances.  Nine  years  ago  there  were 
no  operatives  in  the  tin  plate  industry;  there  was  no  such  indus- 
try in  existence  in  this  country. 

Contrasted  with  this  large  increase  in  the  rate  of  wages  among 
tin  plate  workers  in  the  United  States  is  the  action  taken  by  the 
provisional  committee  of  the  newly  formed  South  Wales  Tin 
Plate  Masters'  Association,  which  met  representatives  of  the 
workmen  in  conference  in  Swansea  recently  on  the  wage  question. 
A  cable  dispatch  says : 

"After  two  hours'  discussion  it  was  decided  to  recommend  the 
acceptance  of  a  10  per  cent  reduction  throughout  the  trade." 

No  one  has  yet  succeeded  in  showing  that  prices  of  tin  plate 
have  been  advanced  in  the  United  States  to  the  point  of  unrea- 
sonable or  oppressive  exaction,  in  view  of  the  large  increase  that 
has  taken  place  in  the  cost  of  production  by  reason  of  higher 
wages,  increased  cost  of  materials,  etc.  It  is  not  my  purpose  to 
either  accuse  or  defend  the  tin  plate  trust.  That  organization, 
like  all  other  trusts,  will  stand  or  fall  on  its  merits.  This  much, 
however,  is  clear  and  indisputable:  That  to  the  policy  of  pro- 
tection is  wholly  due  the  fact  of  the  establishment  of  the  tin  plate 
industry  in  the  United  States:  and  that  through  the  establish- 
ment of  this  industry,  many  millions  of  dollars  have  been  saved 
to  the  consumers  of  tin  plate,  and  many  millions  of  dollars  have 
been  added  to  the  gross  sum  of  wages  paid  to  American  labor. 

Enemies  of  protection,  unable  to  explain  away  the  catastrophe 
which  has  overtaken  their  cherished  theories  through  the  won- 
derful development  of  our  export  trade  in  manufactured  products, 
seem  to  find  much  comfort  and  consolation  in  the  assertion  that 
.  this  tremendous  trade  has  been  brought  about  by  means  of  a  gen- 
eral cut  in  prices,  and  that  the  home  consumer  pays  more  than 
the  foreign  consumer  pays  for  the  same  article.  There  was  a 
time,  in  the  four  years  of. depression  following  the  free-trade  tri- 
umph of  1892,  when  to  a  considerable  extent  our  manufacturers 
were  compelled  to  sacrifice  their  profits  in  order  to  find  a  foreign 
outlet  for  their  surplus  products.  This  was  a  time  of  national 
underconsumption  and  hence  of  national  overproduction;  a  time 
when  a  reduction  of  prices  afforded  a  means  of  obtaining  ready 
cash  for  products  rendered  unsaleable  because  of  the  greatly  di- 
minished purchasing  and  consuming  power  of  the  nation  as  a 
whole.  In  this  way  manufacturers  found  it  possible  to  keep  their 
plants  in  operation  and  their  labor  employed  during  a  long  and 

199 


trying  period  of  deadly  depression.  Their  goods  were  marketed 
abroad  at  figures  which  left  little  or  no  margin  of  profit,  and 
sometimes  involved  actual  loss.  But  there  was  no  choice.  Either 
this,  or  close  the  factories  and  discharge  the  workpeople.  But 
this  dismal  necessity  no  longer  exists.  Export  prices  are  now 
much  nearer  on  a  parity  with  domestic  prices.  It  would  be  hard 
to  find  a  manufacturer  to-day  who  is  developing  a  foreign  trade 
without  profit  or  at  a  loss.  Mills  are  too  busy  working  over-time 
to  catch  up  with  orders.  Discounts  are  allowed  on  goods  sold 
for  export,  for  several  good  reasons — such  as  the  spot  cash  pay- 
ment for  such  goods,  whereas  in  domestic  trade  long  credits  are 
the  rule  and  spot  cash  the  exception;  and  the  additional  fact  that 
in  marketing  his  product  through  the  export  trade  the  manu- 
facturer is  at  no  expense  for  advertising,  maintenance  of  agencies, 
and  other  items  in  the  cost  of  distribution  amounting  in  the  ag- 
gregate to  fully  the  difference  between  export  prices  and  domestic 
prices.  The  domestic  consumer  understands  this  perfectly,  and 
does  not  grumble  at  it.  It  is  only  the  American  free-traders  who 
feel  aggrieved  at  a  condition  which  increases  the  use  of  Ameri- 
can material,  increases  the  employment  of  American  labor,  and 
increases  the  consumption  of  American  food  products  by  Ameri- 
can workers  to  the  enormous  average  of  over  $50  per  capita, 
against  an  estimated  per  capita  average  of  less  than  $1.50  of 
American  food  products  sold  to  and  consumed  by  the  workpeople 
of  Europe.  Who  should  find  fault  with  such  a  state  of  things? 
The  foreign  manufacturer  and  his  American  agents  and  friends 
don't  like  it,  of  course;  but  I  think  it  will  be  found  that  the 
American  farmer  is  not  losing  any  sleep  because  Europeans  get 
a  small  discount  from  current  American  prices  on  agricultural 
implements,  sewing  machines,  or  typewriters;  still  less  is  the 
American  wage  earner  worrying  over  the  practical  workings  of  a 
system  which  gives  him  increased  wages  and  increased  employ- 
ment. Our  export  trade  of  a  million  dollars  per  day,  including 
Sundays  and  holidays,  in  the  products  of  American  manufacture 
is  one  of  the  glories  of  the  protective  policy.  Foreigners  know 
it,  and  recognize  it  as  the  direct  outgrowth  of  that  policy. 

Mr.  Havemeyer's  contention  that  "the  customs  tariff  is  the 
mother  of  trusts"  was  a  blessing  in  disguise.  It  was  intended 
as  a  blow  at  the  party  in  power  at  the  time  Mr.  Havemeyer  failed 
to  get  the  increase  of  duties  he  wanted  on  refined  sugar,  and  also 
failed  to  get  a  reduction  or  repeal  of  the  duties  on  raw  sugar. 
Its  effect  has  proved  to  be  exactly  the  opposite  of  that  which  was 
intended.  Before  Mr.  Havemeyer  left  the  witness  stand  he  placed 
on  record  the  dam  aging  admission  that  the  sugar  trust  could, 

200 


SAMUEL  GOMPERS 
EDWARD  Q.  KEASBEY 
U.  M.  ROSE 


T.   B.  WALKER 
M.  M.  GARLAND 
A.  LEO  WEIL 


if  assured  of  the  absence  of  domestic  competition  outside  of  his 
trust,  get  along  extremely  well  without  any  protection  whatso- 
ever, and  that  he  would  welcome  the  abolition  of  all  protective 
duties  on  raw  and  refined  sugars.  So  we  may  dismiss  Mr.  Have- 
meyer  with  the  remark  that  in  his  testimony  before  the  Industrial 
Commission  he  served  his  country  better  than  he  knew,  and  much 
better  than  he  intended,  by  making  it  clear  that  in  the  case  of  the 
sugar  trust  protection  is  more  a  hindrance  than  a  help. 

The  question  of  the  effect  of  a  protective  tariff  upon  wages 
has  been  injected  into  this  discussion  somewhat  gratuitously  on 
the  part  of  the  enemies  of  protection;  somewhat  unwisely,  too, 
it  must  appear,  for  no  one,  I  believe,  claims  that  a  reduction  in 
wages  has  yet  been  put  in  force  by  the  trusts.  The  fact  is  that 
in  the  general  advance  of  wages,  estimated  at  15  per  cent  for  the 
entire  country,  which  has  taken  place  in  connection  with  the 
phenomenal  prosperity  following  the  restoration  of  the  policy  of 
protection  to  American  labor  and  industry,  trust  wage  payers 
have  thus  far  shown  no  disposition  to  shirk  their  share.  So  we 
must  conclude  that  the  free-trade  claim  that  wages  are  not 
affected  by  tariffs  is  a  proposition  on  general  principles  intended 
to  discredit  protection  and  not  aimed  at  the  trusts.  Here  again 
the  American  free-trader  stands  solitary  and  alone,  a  gloomy 
Napoleon  on  an  economic  St.  Helena.  His  foreign  fellows  long 
ago  abandoned  the  contention.  There  is  at  present  scarcely  a 
shade  of  difference  among  European  manufacturers  as  to  the  true 
cause  of  their  inability  to  compete  with  America  in  the  world's 
markets.  With  common  accord  they  say  it  is  the  result  of  the 
high  wages  paid  American  workingmen,  and  that  the  establish- 
ment and  maintenance  of  the  American  standard  of  wages  has 
been  made  possible  only  by  the  operation  of  the  protective  prin- 
ciple. The  American  wage  earner  has  lately  had  an  object  lesson 
along  the  line  of  tariffs  and  wages.  The  lesson  lasted  four  years, 
and  he  is  not  likely  to  forget  it. 

The  free-trade  advocate  of  the  removal  of  protection  as  a 
trust  antidote  finds  himself  upon  the  horns  of  a  dilemma.  Either 
we  need  protection  to  hold  the  home  market  against  outside  com- 
petition, or  we  do  not  need  protection  and  can  get  along  equally 
well  without  it — better,  our  free-trade  friends  tell  us.  If  we  do 
not  need  protection,  its  removal  would  be  valueless  as  a  trust 
antidote.  If  we  do  need  protection  in  order  to  maintain  our  hold 
upon  a  market  with  a  consuming  capacity  estimated  at  nine 
billions  yearly,  then  the  removal  of  protection  would  work  such 
havoc  with  our  country's  prosperity  as  the  gloomiest  of  pessimists 
would  find  it  well  nigh  impossible  to  adequately  foreshadow.  I 

201 


am  not  a  pessimist.  I  am  a  protectionist,  a  very  different  thing, 
now  and  always.  Protectionists  in  the  past  have  known  how  to 
confront  a  danger  with  a  defense.  They  will  know  how  to  meet 
the  trust  question  at  the  proper  time  and  in  the  proper  way. 
They  have  never  failed  in  an  emergency;  they  will  not  fail  now. 
A  remedy  will  he  forthcoming  whenever  the  pathological  moment 
arrives.  We  all  remember  the  practitioner  who  could  cure  but 
one  disease,  and  who  always  threw  the  patient  into  a  fit,  and  then 
prescribed  for  the  fit.  History  does  not;  however,  record  that 
he  was  invariably  successful  in  curing  the  fit.  The  stage  of  fits 
has  not  yet  been  reached,  though  some  of  the  quacks  would  have 
us  think  otherwise.  Their  antidote  is  an  old  and  a  well  known 
one.  It  was  tried  in  1892,  and  we  all  know  how  it  worked.  Do 
we  want  any  more  of  it?  I  think  not. 

The  conference  took  a  recess  until  3  o'clock  in  the  afternoon. 


AFTERNOON   SESSION,    SEPTEMBER  14. 

The  conference  was  called  to  order  at  3  o'clock  by  Vice- 
Chairman  Dudley  G.  Wooten.  The  chair  announced  that  owing 
to  the  number  of  papers  the  twenty-minute  rule  would  be 
enforced.  He  then  introduced  S.  H.  Greeley  of  Illinois,  repre- 
senting the  National  Grain  Growers'  Association. 

S.  H.  GREELEY. 

National  Grain  Growers'  Association. 

An  evil  from  which  no  relief  is  possible  seems  to  be  an 
absurdity  in  this  age  of  progress  and  discovery,  but  the  producers 
and  shippers  of  grain  in  the  great  Mississippi  Valley  are  to-day 
in  the  grasp  of  a  number  of  so  skillfully  managed  combinations, 
created  by  secret  rates  and  special  privileges,  granted  them  by 
i-ailroads,  that  the  brightest  mind  cannot  suggest  a  practical 
remedy ;  by  practical,  I  mean  a  remedy  which  the  people  are  ready 
to  apply,  for  I  assume  from  the  general  tone  of  the  press,  that 
as  a  nation  we  are  not  yet  ready  to  own  the  railroads,  the  very 
mainspring  of  many  of  the  combinations  and  trusts,  which  are 
now  crushing  out  the  middle  class  in  the  United  States,  and  fast 
hurrying  us  to  the  condition  of  the  yellow  race. 

To-day  capital  and  labor  are  prosperous,  the  intermediate 

202 


class  find  themselves  struggling  against  hidden  and  unscrupulous 
foes,  to  maintain  an  independent  position  in  society,  they  share 
hut  slightly  in  the  general  prosperity  and  are  fast  drifting  into 
the  employ  of  combinations  and  trusts,  and  disappearing  as  inde- 
pendent factors  in  society. 

To  my  mind  the  most  glaring  examples  of  the  power  of  the 
railroads  to  make  and  unmake  men,  is  seen  in  the  Chicago  grain 
market  of  to-day;  merchants  no  longer  huy  and  sell  grain  in  Chi- 
cago, hut  their  places  have  been  usurped  by  the  "recipients  of  cut 
rates  and  special  privileges,"  who  have  become  as  necessary  an 
adjunct  of  the  modern  railroad,  tapping  the  grain  belt,  as  the 
general  freight  office — it  is  their  business  to  see  that  the  railroad 
favoring  them  gets  their  share  of  the  grain  tonnage,  and  where  a 
merchant  paying  the  tariff  rates  of  freight  would  lose  money,  this 
specially  favored  class  grows  rich;  thev  handle  all  the  srrain  that 
they  are  physically  capable  of  carinsr  for  on  the  particular  line  of 
railroad  of  which  they  are  the  favored  dealers. 

The  effect  of  this  condition  has  been  disastrous  in  many  ways: 

1.  Competition  has  been  destroyed  to  a  great  extent,  and 
the  business  of  handling  grain  in  Chicago  markets,  has  Cby  force 
of  special  favors  from  railroads)  concentrated  in  the  hands  of  sev- 
eral large  concerns,  who  do  not  bid  against  each  other,  but  are 
known  to  agree  on  prices  each  day  for  grain  in  territory  where 
their  bids  are  liable  to  reach  the  same  sellers. 

Without  advantages  of  ability  or  capital,  over  the  merchants 
whom  they  have  driven  from  the  field,  these  concerns  through 
emnlovees  and  agents  carry  on  a  traffic,  not  in  srrain,  but  in 
freight,  switching  and  elevator  charges;  incidentally  the  grain  is 
tran snorted,  but  if  tariff  rates  and  fixed  charges  were  paid  it 
would  show  a  loss. 

2.  Values  suffer  far  more  than  would  be  conceded  even  bv  a 
majority  of  the  grain  growers.     Unnatural  conditions  constantly 
surround  the  movement  of  srrain  ;  if  the  business  of  a  railroad  lags, 
grain  is  forced  to  move  by  that  railroad  through  its  favored 
shipper,  bv  a  cut  rate,  thus  creating  a  fictitious  supply  at  a  time 
when  the  demand  is  measrer,  and  the  result  is  a  decline  in  values 
bv  renson  of  excessive  offerings,  while  had  the  grain  been  -per- 
mitted to  remain  at  the  countrv  points  until  the  demand  justified 
it?  =hipment,  the  depression  in  values  would  have  been  avoided 
and  the  demand  would  have  been  all  the  more-urgent  by  reason 
of  the  grain  not  being  in  si°;ht. 

.Another  condition  which  tends  to  depress  values  i?  the  pilinsr 
up  of  vast  stocks  of  grain  in  the  warehouses  of  Chicasro  and  bv 
every  trick  and  device  preventing  the  moving  of  these  stocks, 

203 


so  long  as  they  can  be  sold  for  future  delivery  at  a  profit.  The 
public  and  private  elevators  of  Chicago  have  passed  into  the 
hands  of  the  concerns  specially  favored  by  the  railroads;  several 
of  them  lease  the  terminal  elevators  of  the  railroads.  The  result 
has  been  that  the  public  warehouse  system  of  Chicago  has  been 
prostituted  to  the  extent  that  the  public  no  longer  can  handle 
grain  through  them,  and  what  was  once  the  depots  for  the  pub- 
lic's grain  are  absolutely  the  storehouse  of  the  railroad's  favored 
dealer  to  the  exclusion  of  all  other  persons.  It  is  to  the  advan- 
tage of  this  favored  class  that  low  prices  should  prevail,  so  that 
they  can  fill  their  vast  warehouses  (aggregating  almost  40,000,- 
000  bushels'  capacity)  with  cheap  grain,  sell  it  for  future  delivery 
at  a  premium,  buying  back  and  selling  for  a  still  more  deferred 
delivery  as  often  as  market  conditions  will  permit.  When  it 
ceases  to  pay  tribute  as  a  speculative  commodity,  they  then  pro- 
ceed to  sell  it  in  eastern  and  foreign  markets,  and  having  driven 
out  of  business  all  other  grain  shippers  by  their  methods,  they 
merchandise  the  grain  themselves;  but  no  matter  how  urgent 
the  consumptive  demand,  so  long  as  speculative  sales  pay  best, 
consumers  cannot  get  supplies  from  the  vast  stores  held  in  Chi- 
cago. 

This  feature  of  the  grain  trade  and  its  tendency  toward  mo- 
nopoly are  clearly  set  forth  by  the  courts,  in  decisions  affecting 
this  very  condition,  in  an  action  brought  by  the  attorney-general 
of  the  state  of  Illinois  against  the  public  warehousemen  of  Chi- 
cago. 

The  eminent  Judge  Tuley,  after  listening  three  weeks  to  evi- 
dence, and  pleadings  of  counsel,  rendered  an  opinion  in  favor  of 
the  people,  in  which  he  used  the  following  language : 

"The  great  weight  of  evidence  is  to  the  effect  that  the  ware- 
housemen of  Chicago  did  not  commence  to  so  deal  in  grain  to 
any  general  extent  until  about  the  year  1885 ;  that  the  practice 
has  grown  so  rapidly  that  now  and  for  two  or  three  years  last  past 
they  are  the  principal  buyers  and  sellers  on  the  Chicago  market 
and  upon  the  Chicago  Board  of  Trade;  that  by  reason  of  the 
advantages  they  possess,  and  by  reason  of  certain  changes  in  the 
grain  trade,  they  have  practically  driven  out  of  business  the  class 
of  men  who  were  before  them  engaged  in  buying  and  shipping 
grain  on  the  Chicago  market.  And  it  is  admitted  that  they  have 
dealt  in  grain  to  the  extent  that  they  now  own  at  least  three- 
quarters  of  all  the  grain  stored  in  the  public  warehouses  of  the 
city  of  Chicago,  and  it  also  appears  by  the  evidence  that  they  are 
fast  monopolizing  the  business  of  dealing  in  grain  in  the  Chicago 
market. 

201 


"It  is  in  evidence  that  they  not  only  own  this  large  proportion 
of  the  grain  stored  in  their  public  warehouses,  and  also  are  the 
principal  buyers  in  the  Chicago  market,  but  that  nearly  all  of 
them  deal  in  'futures.' 

"It  is  easy  to  perceive  the  temptation  they  would  be  under  as 
to  mixing  the  grain  of  their  customers,  and  also  to  control  the 
market  by  the  ownership  of  such  a  vast  proportion  of  the  ware- 
housed grain.  It  is  also  easy  to  perceive  in  selling  grain  the 
temptations  they  would  be  under  to  abate  or  remit  storage  charges 
in  order  to  effect  sales. 

"In  the  case  at  bar  it  is  shown  that  the  public  warehouse- 
men of  Chicago,  being  licensed  to  carry  on  a  warehouse,  have 
used  their  capital,  to  wit,  their  warehouses  and  business  as  ware- 
housemen, to  aid  them  in  trading  in  grain  in  competition  with 
the  public,  and  having  a  great  advantage  over  such  public  in  such 
trading,  by  reason  of  their  control  of  such  licensed  warehouses, 
they  have  become  the  principal  buyers  and  sellers  of  grain  in  the 
Chicago  market  and  upon  some  lines  or  systems  or  railroads  cen- 
tering in  Chicago,  almost  the  only  buyers. 

"It  is,  however,  contended  that  the  warehouseman  gets  the 
grain  because  he  pays  more  for  it  than  other  bidders;  that  the 
constitution  of  the  state  requires  the  law  passed  in  pursuance 
thereof  to  be  construed  'in  the  interests  of  the  producer/  there- 
fore it  is  to  the  interest  of  the  producer  that  the  warehouse  be 
allowed  to  enter  into  the  grain  business.  No  monopoly  in  grain 
dealing  can  operate  in  the  long  run  to  the  interest  of  the  producer. 
There  is  no  truer  maxim  in  economics  than  that  'competition  is 
the  life  of  trade.'  The  warehousemen  may  be  able  to  pay  more 
than  outside  shippers  or  buyers  until  he  has  driven  them  out  of 
the  market ;  when  he  has  succeeded  in  so  doing  (and  the  evidence 
shows  that  that  time  has  nearly  arrived)  and  he  has  practically  no 
competition,  then  the  producer  would  suffer.  The  law  should 
not  be  so  construed  as  to  give  the  warehouseman  the  right  to  use 
his  privilege,  his  public  business  as  a  warehouseman  to  crush  out 
competition  against  himself  as  a  dealer  in  grain." 

In  affirming  the  decision  of  Judge  Tuley,  the  Supreme  Court 
of  Illinois,  touching  on  the  tendency  toward  monopoly,  said : 

"It  is  a  firmly  established  rule  that  where  one  person  occupies 
a  relation  in  which  he  owes  a  duty  to  another  he  shall  not  place 
himself  in  any  position  which  will  expose  him  to  temptation  of 
acting  contrary  to  that  duty  or  bring  his  interest  in  conflict  with 
his  duty.  This  rule  applies  to  every  person  who  stands  in  such  a 
position  that  he  owes  a  duty  to  another,  and  courts  of  equity  have 
never  fettered  themselves  by  defining  particular  relations  to 

205 


which,  alone,  it  will  be  applied.  They  have  applied  it  to  agents, 
partners,  guardians,  executors,  administrators,  directors,  and 
managing  officers  of  corporations,  as  well  as  trustees,  but  have 
never  fixed  or  denned  its  limits.  The  rule  is  founded  upon  the 
plain  consideration  that  the  one  charged  with  duty  shall 
act  with  regard  to  the  discharge  of  that  duty,  and  he 
will  not  be  permitted  to  expose  himself  to  temptation  or 
be  brought  .  into  a  situation  where  his  -  personal  interests 
conflict  with  his  duty.  Courts  of  equity  have  never  allowed  a 
person  occupying  such  a  relation  to  undertake  the  service  of  two 
whose  interests  are  in  conflict,  and  then  endeavor  to  see  that  he 
does  not  violate  his  duty,  but  forbids  such  a  course  of  dealing 
irrespective  of  his  good  faith  or  bad  faith.  If  the  duty  of  the 
defendants,  as  public  warehousemen,  stands  in  opposition  to  per- 
sonal interests  as  buyers  and  dealers  in  grain  storing  the  same  in 
their  own  warehouses,  then  the  law  interposes  a  preventive  check 
against  any  temptation  to  act  from  personal  interest  by  prohibit- 
ing them  from  occupying  any  such  position. 

"The  public  warehouses  established  under  the  law  are  public 
agencies,  and  the  defendants,  as  licensees,  pursue  a  public  em- 
ployment. It  is  clothed  with  a  duty  toward  the  public.  The 
evidence  shows  that  defendants,  as  public  warehousemen  storing 
grain  in  their  own  warehouses,  are  enabled  to,  and  do,  overbid 
legitimate  grain  dealers  by  exacting  from  them  the  established 
rate  for  storage  while  they  give  up  a  part  of  the  storage  charges 
\vhen  they  buy  or  sell  for  themselves.  By  this  practice  of  buying 
and  selling  through  their  own  elevators  the  position  of  equality 
between  them  and  the  public  whom  they  are  bound  to  serve,  is 
destroyed,  and  by  the  advantage  of  their  position  they  are  en- 
abled to  crush  out,  and  have  nearly  crushed  out,  competition  in 
the  largest  grain  market  in  the  world.  The  result  is,  that  the 
warehousemen  own  three-foiirths  of  all  the  grain  stored  in  public ' 
warehouses  of  Chicago,  and  upon  some  of  the  railroads  the  only 
buyers  of  grain  are  the  warehousemen  on  that  line. 

"In  exercising  the  public  employment  for  which  he  is  licensed 
he  cannot  be  permitted  to  use  the  advantage  of  his  position  to 
crush  out  competition  and  to  combine  in  establishing  a  mo- 
nopoly by  which  a  great  accumulation  of  grain  is  in  the  hands  of 
the  warehousemen,  liable  to  be  suddenly  thrown  upon  the  market 
whenever  they,  as  speculators,  see  profit  in  such  course.  The 
defendants  are  large  dealers  in  futures  on  the  .Chicago  Board  of 
Trade,  and  together  hold  an  enormous  supply  of  grain  ready  to 
aid  their  opportunities  as  speculators.  The  warehouseman  issues 
his  own  receipt  to  himself.  As  public  warehouseman  he  gives  a 

206 


receipt  to  himself  as  individual,  and  he  is  able  to  use  his  own 
receipts  for  the  purpose  of  trade  and  to  build  up  a  monopoly  and 
destroy  competition.  That  this  course  of  dealing  is  inconsistent 
with  the  full  and  impartial  performance  of  his  duty  to  the  public 
seems  clear.  The  defendants  answer  that  the  practice  had  a 
beneficial  effect  upon  producers  and  shippers,  and  naturally  were 
able  to  prove  that  when,  by  reason  of  their  advantages,  they  were 
overbidding  other  dealers  there  was  benefit  to  the  sellers,  but 
there  was  an  entire  failure  to  show  that  in  the  general  average 
there  was  any  public  good  to  producers  or  shippers." 

Would  any  honorable  man  try  to  override  so  sweeping  a 
decision  of  the  highest  court  of  the  great  state  of  Illinois?  Indi- 
viduals would  bow  to  this  logical  and  equitable  decision,  appeal- 
ing as  it  did  to  common  sense  and  sustained  by  well-settled  prin- 
ciples of  law;  but  the  railroads  and  their  favorites,  who  had 
tasted  the  advantages  of  monopoly,  immediatelv  set  to  work  to 
break  the  force  of  this  victory,  which  had  carried  joy  to  the 
hearts  of  hundreds  of  small  dealers  throughout  the  state  of  Illi- 
nois and  the  great  Northwest;  it  could  not  be  done  by  honorable 
methods;  intimidation,  bribery  and  deception  were  their  only 
tools;  and  by  the  aid  of  the  officers  of  the  railroads,  who  traveled 
from  town  to  town,  in  the  interests  of  this  monopoly,  to  inform 
shippers  it  would  be  as  well  for  them  to  submit;  by  the  special 
train  provided  by  the  railroads  to  carry  the  agents  of  the  Chicago 
warehouseman  from  town  to  town ;  by  offering  labor  one  incentive 
to  support  their  methods,  and  grain  handlers  an  incentive 
directly  opposed  to  the  one  offered  to  labor;  and  finally  and  more 
effectually  placing  at  our  state  capitol  a  strong  lobby  "whose  argu- 
ments were  made  in  private,  this  combination,  embracing  all  the 
public  warehousemen  in  Chicago  and  almost  every  trunk  line 
operating  west  of  that  city,  forced  through  the  Legislature  of 
Illinois  a  bill  which  for  the  time  being  again  placed  the  yoke  of 
monopoly  on  the  neck  of  the  grain  trade  in  the  greatest  grain 
market  of  the  world  and  its  great  tributary  states  which  produce 
the  surplus  grain  crops.  As  a  result,  individual  effort  to  succeed 
is  no  longer  possible,  the  conditions  outlined  in  the  court  decis- 
ions are  intensified,  that  is,  the  monopoly  has  become  complete 
and  the  railroads  simply  dictate  who  shall  and  who  shall  not  do 
business.  This  condition,  originally  affecting  only  the  business- 
coming  to  Chicago  from  the  west  has  now  extended  to  shipments 
of  grain  to  the  east  from  that  market,  and  scores  of  individuals 
and  firms  formerly  prosperous,  have  disappeared  or  drifted  into 
other,  and  in  some  cases,  less  legitimate  lines. 

Practically  all  the  great  railroads  tapping  the  grain  belt  are 

207 


in  the  grain  business;  the  details  of  their  arrangements  are,  of 
course,  secrets,  but  it  requires  but  very  little  investigation  to 
satisfy  the  most  skeptical  that  they  each  have  one,  two  or  three 
concerns  handling  the  bulk  of  grain  on  their  linesj  to  whom  the 
published  tariffs  are  simply  a  guide  as  to  what  the  public  have  to 
pay;  the  public  soon  discover  that  the  favored  shipper  can  do 
business  with  an  entire  disregard  of  fixed  charges  and  still  pros- 
per. One  railroad  president  admitted  at  a  public  investigation 
that  his  company  had  organized  a  corporation  for  the  purpose  of 
carrying  on  a. grain  business  at  all  points  on  their  line,  that  it 
was  necessary  to  do  so  to  protect  their  interests,  as  their  com- 
petitors had  arrangements  with  shippers  that  were  practically 
preventing  the  competition  of  the  ordinary  shipper.  With  this 
tendency  to  create  a  monopoly,  to  destroy  competition,  to 
secretly  enrich  a  few  men  and  destroy  the  business  of  hundreds 
of  others,  to  evade  laws,  to  override  courts,  to  bribe  legislators,  to 
intimidate  the  public,  to  create  unnatural  conditions,  by  destroy- 
ing the  natural  laws  of  supply  and  demand,  the  railroads  and 
their  creatures  are  making  rapid  strides  toward  a  complete  con- 
trol of  the  grain  markets  of  this  country — not  for  the  purpose  of 
advancing  the  price  paid  to  the  producer  or  cheapen  the  price  the 
consumer  is  compelled  to  pay — but  to  force  it  forward  to  points 
of  accumulation  to  be  held  for  speculative  purposes  when  it  is 
possible  to  collect  a  tax  in  the  form  of  storage  charges  from  the 
speculator,  who  is  willing  to  pay  an  enhanced  price  for  a  deferred 
delivery. 

For  twelve  years  the  federal  law,  known  as  the  Inter-State 
Commerce  Law,  has  been  on  trial,  that  railroads  and  individuals 
do  not  even  respect  the  law,  or  try  to  obey  it,  shows  that  our  so- 
called  great  men  of  commerce  and  corporations  have  no  use  for 
laws  except  to  appeal  to  them  for  protection  for  themselves  or 
their  soulless  creations  behind  which  they  hid  their  individuality 
and  from  whose  coffers  they  obtain  the  millions  to  endow  colleges 
and  bribe  public  officials. 

Money  is  a  giant,  beside  which  law  is  a  pigmy;  to  attempt  to 
control  the  present  greed  for  wealth  by  laws,  is  like  trying  to 
make  Niagara's  waters  turn  back  and  climb  the  precipice  over 
which  they  now  flow.  The  disregard  of  the  Inter-State  Com- 
merce Law  and  other  laws  by  accumulated  wealth  is  sufficient 
argument  that  such  accumulations  are  a  menace  to  the  welfare  of 
the  nation  ;  they  respect  neither  the  nation  nor  the  individual,  and 
have  reached  a  point  where  they  no  longer  can  be  tolerated  except 
with  great  danger  to  our  institutions. 

We  find  no  difficulty  in  conquering  a  foreign  enemy.     Why 


should  we  not  do  the  same  with  domestic  enemies,  even  though 
they  are  so  magnificent  in  capitalization  and  water?  The  rail- 
roads for  twelve  years  have  given  us  proof  of  their  contempt  for 
our  laws;  shall  they  now  be  permitted  to  consummate  the  en- 
slavement of  a  majority  of  the  people  or  will  our  national  gov- 
ernment rise  to  the  occasion  and  conquer  and  own  the  giant  that 
threatens  the  liberty  and  happiness  of  its  people? 

With  the  railroads  in  the  hands  of  the  people,  with  rates 
equitable  and  alike  to  all,  men  now  unable  to  cope  with  their 
favored  competitors  will  be  enabled  to  live;  ability,  energy  and 
industry  are  useless  when  a  cut  rate  of  freierht  supplies  the  mar- 
gin to  a  competitor. 

Protect  the  value  of  farm  products  by  preventing  unnatural 
conditions,  which  overcome  the  laws  of  supply  and  demand  and 
depress  values,  to  the  end  that  railroads  may  earn  freight  and 
elevators  collect  storage.  Kill  trusts  and  combinations  by  cut- 
ting the  "tap-root,"  railroad  discrimination. 

J.  C.  HANLEY. 

National  Farmers'  Alliance  and  Industrial  Union  of  America. 

J.  C.  Hanley  said : 

On  behalf  of  the  National  Farmers'  Alliance  and  Industrial 
Union  of  America,  I  desire  to  express  the  approval  of  our  asso- 
ciation of  the  object  and  purpose  of  this  gathering,  if  that  object 
is  for  the  purpose  of  securing  information  and  education  on  the 
«ubjoct,  trusts  and  combines,  their  cause  and  effects  upon  the 
financial,  commercial,  industrial  and  agricultural  interests  of  our 
country,  and  to  find  a  remedy  to  apply  that  will  be  both  practical 
and  effective. 

With  this  idea  before  me,  I  can  assure  this  conference  that  I 
will  render  every  possible  aid  to  bring  good  out  of  this  meeting, 
and  will  pledge  the  earnest  and  active  co-operation  of  the  officers 
and  members  of  our  association  in  carrying  out  anv  plan  or  policy 
that  has  for  its  aim  the  betterment  of  conditions  for  the  people  in 
general. 

The  marvelous  development  and  growth  of  trusts  and  com- 
bines within  the  last  few  years,  and  the  changed  conditions  which 
it  has  brought  about,  in  all  walks  of  industrial  and  social  life,  have 
brought  the  people  abruptly  to  consider  this  new  phase  of  con- 
ditions which  are  novel,  significant  and  far-reaching.  It  has  finally 
dawned  upon  the  people  that  the  formation  and  extension  of  the 

209 


trust  movement  means  new  and  changed  conditions  for  them, 
and  whether  these  conditions  are  for  better  or  for  worse,  is  deter- 
mined by  those  who  are  affected  by  its  operations. 

Trusts  and  combines  if  conducted  on  a  strict  business  com- 
petitive system  would  be  a  blessing  rather  than  a  curse.  But  the 
operation  of  many  of  these  gigantic  monopolies  as  conducted 
at  present  is  a  menace  to  the  existence  and  stability  of  our 
nation. 

The  causes  in  brief  are  the  tendencies  to  capitalize  combina- 
tions at  enormously  watered  values,  and  then  exact  tribute  in 
the  shape  of  fixed  interest  on  this  vastly  over-capitalized  stock. 
The  effort  to  earn  these  fixed  charges  often  places  these  trusts 
and  combines  under  public  disapproval.  Because  of  the  power 
they  control,  they  can  suppress  competition,  put  down  the  price 
of  the  raw  material  or  product,  and  put  up  the  price  of  the  man- 
ufactured article,  while  in  the  same  breath  they  can  reduce  wages 
and  reduce  labor.  Under  these  conditions  the  trust  becomes  a 
curse,  as  none  but  the  members  of  the  combine  or  trust  is  a 
beneficiary,  while  the  producer  and  consumer  are  obliged  to  pay 
the  tribute. 

I  am  convinced  that  legislation  cannot  remedy  this  evil,  ex- 
cept it  strikes  at  the  root  of  the  evil,  and  that  the  government 
should  own  and  control  all  means  of  transportation,  and  public 
utilities,  and  operate  them  in  the  interests  of  the  people.  I  refer 
to  such  agencies  as  railroads,  telegraph  and  telephone  lines,  mines 
of  coal,  iron,  oil,  etc.  While  I  firmly  believe  that  this  will  be  the 
only  correct  and  finally  effective  remedy,  I  am  still  aware  that  it 
will  be  some  time  before  this  condition  will  be  realized,  and  the 
trusts  themselves  are  hastening  this  day  faster  than  the  most 
ardent  socialist  ever  dreamed  of.  But  as  we  must  offer  some  rem- 
edy that  will  meet  the  conditions  that  confront  us,  a  remedy  both 
practical  and  effective,  and  which  can  be  put  into  operation  at 
once,  I  can  sum  the  whole  thing  up  in  one  word,  "competition." 
I  will  therefore  apply  my  remarks  to  matters  and  conditions  hav- 
ing direct  bearing  on  the  interests  of  agriculture. 

There  are  many  ways  in  which  the  farmer  is  made  the  helpless 
victim  of  the  numerous  combines  through  which  his  products  pass 
in  transit  from  the  farm  to  the  consumer,  and  every  one  of  these 
combines  levies  tribute  on  him.  The  transportation,  elevator  and 
cotton  combines  are  possibly  the  most  exacting  of  local  combines, 
and  are  of  such  importance  that  we  have  left  it  to  the  delegates 
of  one  of  our  grain  growers'  societies  to  make  a  special  subject 
of  investigation  of  this  form  of  combine,  and  its  cause  and  effect  on 
agriculture.  In  order  to  secure  competition  for  the  products  of 

210 


the  farm  I  propose  four  remedies  which  will  be  necessary  to  carry 
out  successfully  the  permanent  establishment  of  competition, 
which  is  absolutely  necessary  to  relieve. the  conditions  which  agri- 
culture endures,  and  to  make  the  great  national  crops  of  the 
United  States — wheat  and  cotton — profitable  crops,  instead  of 
crops  raised  at  a  loss : 

1st.  The  opening  and  extending  our  foreign  markets  in 
Oriental  countries. 

2nd.  The  building  of  our  own  merchant  ships  to  carry  our 
products  to  foreign  markets. 

3rd.  The  establishment  and  maintenance  of  permanent  in- 
ternational exhibits,  in  the  Orient,  of  American  raw  and  manu- 
factured products. 

4th.  The  protection  of  American  grain  markets  from  rail- 
road and  warehouse  monopoly  and  the  encouragement  of  local 
and  terminal  competition. 

The  records  of  the  Agricultural  Department  show  that  the 
average  cost  per  pound  of  raising  cotton  was  6  2-10  cents,  while 
the  average  market  price  was  44  to  5  cents  per  pound.  The  enor- 
mous loss  on  this  great  national  crop  of  nearly  three  and  one-half 
billions  of  pounds  of  cotton  can  be  appreciated. 

This  feature  of  the  cotton  situation  last  fall  and  winter  in  the 
south  was  aptly  put  by  Col.  J.  P.  Sossaman,  of  Charlotte,  N".  C., 
who  said  in  a  letter  to  me :  "The  cotton  industry  is  in  terrible 
p]igbts.  There  is  so  much  cotton  in  the  south  that  the  ware- 
houses are  full  and  the  people  are  going  naked,  while  the  crop  is 
for  sale  at  4r|  cents,  and  no  takers.  The  planters  measure  their 
loss  by  the  amount  of  cotton  they  raise." 

And  the  same  condition  applies  to  the  wheat  section.  It  is 
also  raised  at  a  loss.  I  have  compiled  statistics  from  every  section 
of  the  wheat  raising  country,  from  all  kinds  of  land,  prairie,  tim- 
ber, small  and  bonanza  farms.  Eich  and  poor,  educated  and  ig- 
norant farmers,  each  and  every  one  has  the  same  story  to  tell, 
and  that  is  that  wheat  raising  is  done  at  a  loss.  The  following  is 
a  report  by  Mr.  A.  S.  Stephens,  of  Beardsley,  Minn.,  a  well-to-do 
farmer,  who  has  had  nineteen  years'  experience  as  a  successful 
farmer,  200  miles  from  a  terminal  market,  but  who  has  been 
obliged  to  make  up  the  losses  on  the  farm  from  other  business 
pursuits.  His  report  is  an  average  one  from  many  sources,  and 
will  reveal  the  average  condition  on  the  American  farm.  He 
says: 

"My  experience  in  producing  160  acres  of  wheat  has  been  as 
follows : 


211 


Cost  of  producing  1  acre  of  wheat  of  13  bu.  per  acre  (a  very  libera 
yield). 

Value  of  land  $20.00  per  acre. 

Interest  on  same  at  8% $1.60 

Taxes  on  same .12 J^ 

Plowing  same 1.25 

Harrowing  and  seeding .50 

Cutting  and  binding .  1.25 

Stacking .90 

Threshing  at  3c.  per  bu ... .39 

Help  for  threshing  75  acres,  one  day's  work  20  men  at 

$2.00  per  acre,  one  day .54 

Board  of  crew  for  threshing  as  above  and  machine  crew_     .20 

Delivering  to  elevator,  6  miles,  3c.  per  bu. .39 

Seed,l>4  bu.  at  50c.  per  bu .62 

Natural  wear  and  tear  of  machinery  and   earnings  of 

housewife _ .26 


$8.02^ 

Making  an  actual  cost  of  nearly  62c.  per  bu.  for  production. 
Average  highest  price  paid  at  this  station  in  the  last  past  19  years, 
76c. 

Average  lowest  in  the  same  period,  43c. 

"In  finding  the  above  average  prices,  I  take  $1.38,  which  was 
paid  at  this  station  only  one  day  during  the  Joe  Leiter  specula- 
tion, whilst  the  low  prices  have  been  paid  fully  seventy  days  out 
of  every  100  days  during  the  above  period.  The  above  is  the 
actual  cost  of  producing  a  bushel  of  wheat  on  an  area  of  160  acres 
of  land.  In  addition  to  the  above,  which  cannot  be  avoided,  the 
farmer  has  to  pay  fire  insurance,  usually  hail  insurance,  road 
taxes,  and  feed  horses  in  idle  times,  and  other  incidental  ex- 
penses too  numerous  to  mention,  which  will  amount  to  at  least 
60  cents  per  acre,  making  a  total  cost  of  $8.62  per  acre,  or  66  4-13 
cents  per  bushel,  whilst  the  average  prices  in  the  above  period 
have  been  50  cents  per  bushel,  or  an  actual  loss  of  16  cents  per 
bushel,  or  $2.08  per  acre,  or  $332.80  per  160  acres. 

"It  appears  quite  evident  that  there  are  several  causes  for 
the  low  prices,  viz: 

"1st.  We  have  rings  and  combines  of  mills  and  line  elevators 
that  apparently  make  agreement  to  pay  (especially  early  in  the 
threshing  season)  a  stated  price,  regardless  of  cost  of  production 
or  prospect. 

"2nd.  We  at  present  practically  have  but  one  foreign  buyer 
or  market,  which  is  England.  It  is  natural  for  human  ambition 
to  pay  as  little  as  possible  for  all  purchases,  and  between 
the  friendly  feeling  of  American  monopoly  and  English  com- 
bines, the  American  producer  is  at  their  full  mercy,  to  that  ex- 

212 


tent  that  we  have  produced  wheat  at  a  loss  for  a  number  of  years 
past. 

"The  result  of  it  is  that  one-third  of  the  homes  that  were  given 
to  the  tillers  of  the  soil  by  the  United  States  government  have 
been  lost  by  foreclosures,  one-third  are  now  paying  tribute  to 
mortgagees,  the  other  third  have  succeeded  in  keeping  their 
homes  by  force  of  economy  and  hard  work/' 

Now,  gentlemen,  I  come  to  the  matter  of  this  paper,  and  that  is 
the  establishment  and  extension  of  our  foreign  markets  and  its 
effect  on  agriculture  and  labor.  It  is  well  known  that  we  can 
raise  more  wheat,  meat  and  textile  fabrics  than  would  feed  and 
clothe  a  nation  double  our  size.  We  have  a  great  deal  of  export 
products  that  we  must  sell  to  dispose  of  our  surplus.  We  raise 
in  round  numbers  500,000,000  bushels  of  wheat  annually.  We 
consume  for  home  consumption  about  400,000,000  bushels.  We 
have,  therefore,  about  100,000,000  bushels  of  wheat  for  export 
annually.  We  are  so  situated  that  the  export  crop  sets  the  price 
by  which  the  whole  crop  is  measured.  If  we  have  but  one  cus- 
tomer who  will  buy  from  us,  and  he  is  quite  indifferent  about 
what  prices  he  pays,  so  long  as  it  is  the  lowest  possible  price  that 
he  must  pay,  the  price  that  he  pays  for  our  products  is  the 
price  that  the  producer  measures  the  profits  o>r  losses  of  his  toil 
and  industry  by. 

Now  the  very  necessities  of  the  farmers  compel  them  to  part 
with  the  grain  in  the  early  months  of  the  crop  year,  and  by  the 
very  volume  of  grain  thus  thrown  on  the  market  they  assist  the 
gamblers  who  are  utilizing  every  means  to  "bear"  the  market 
at  that  time  of  year  when  the  bulk  of  the  grain  is  passing  out  of 
the  farmers'  hands.  We  find  that  of  the  100,000,000  bushels  of 
grain  that  is  for  export,  50,000,000  is  on  the  western  slope,  and  as 
a  natural  consequence  must  be  loaded  into  ships  and  sent  to  for- 
eign markets.  The  very  instant  that  a  vessel  clears  port  it  is 
registered  on  the  boards  of  the  markets  of  the  world  that  a  ship 
loaded  with  grain  or  produce  containing  —  —  bushels  of  grain, 
destined,  for  instance,  to  Liverpool,  England,  has  cleared.  The 
moment  that  these  vessels  are  placed  on  the  blackboards  and 
marked  "to  arrive,"  they  know  that  it  will  arrive  sometime  un- 
less it  should  encounter  storms  and  go  to  the  bottom  of  the  ocean. 
But  barring  accidents  it  will  arrive  and  the  purchaser  knows 
that  he  must  take  it  at  some  figure,  and  of  course  he  will  drive  as 
sharp  a  bargain  as  possible  and  bear  the  market  to  its  lowest  pos- 
sible point. 

These  ships,  laden  with  about  one-half  of  our  grain,  have  a 
long  and  dangerous  journey,  and  are  from  four  to  five  months  at 

218 


&ea,  making  the  trip  around  Cape  Horn  and  crossing  the  equator 
twice.  This  immense  volume  of  grain  being  afloat  and  marked 
"to  arrive"  at  a  time  when  the  bulk  of  the  farmers  are  parting 
with  their  grain,  contributes  in  no  small  degree  to  the  establish- 
ment of  the  "low  prices"  at  which  our  farmers  are  forced  to  part 
with  their  grain.  England  is  our  chief  and  only  consumer  on 
whom  we  must  depend  to  take  our  surplus  food  crops,  and  a 
natural  consequence  is  that  any  agency  that  will  create  com- 
petition and  give  us  another  market  for  our  surplus  products  will 
stimulate  the  prices  which  competitors  will  establish  in  order  to 
secure  the  products  that  they  must  have.  And  any  advance  on 
the  prices  of  such  products  gained  by  this  agency  will  go  to  the 
producer  and  he  at  once  becomes  the  beneficiary. 

Let  us  for  a  moment  consider  the  Oriental  situation  and  draw 
intelligent  conclusions.  Here  we  have  a  vast  population  aggre- 
gating 400,000,000  people  which  would  be  asked  to  consume  our 
40,000,000  to  50,000,000  bushels  of  wheat.  This  would  mean 
that  each  inhabitant  would  consume  less  than  one-half  a  peck. 
While  on  the  other  hand  this  nation,  with  70,000,000  inhabitants, 
consumes  400,000,000  bushels,  or  5  5-7  bushels  per  inhabitant.  It 
will  thus  be  seen  that  one-half  of  our  wheat  export  crop  would 
not  provide  enough  to  make  pie  crust  in  that  country.  It  might 
be  suggested  that  the  inhabitants  are  too  poor  to  be  able  to  buy 
wheat  flour,  as  it  would  be  considered  a  luxury,  and  could  not 
afford  it.  To  this  question  I  would  answer  that  there  are  wealthy 
and  middle  classes  in  that  country  the  same  as  we  have  here,  and 
those  who  could  afford  to  buy  wheat  bread  would  do  so.  History 
has  shown  that  where  wheat  bread  has  come  in  competition  with 
rice  and  coarse  grain  it  has  displaced  them  permanently.  Being 
a  luxury,  we  could  not  expect  to  establish  it  as  a  stable  article  of 
food,  but  the  demand  would  grow  as  fast  as  the  people  would 
acquire  a  taste  for  it,  and  know  that  they  could  get  it  when  they 
wanted  it. 

It  has  been  computed  that  the  establishment  of  this  market 
will  bring  from  15  to  20  cents  a  bushel  extra  for  the  export  crop, 
and  as  the  export  sets  the  price  for  the  entire  crop  the  saving  to 
the  American  farmer  would  be  $75,000,000  to  $100,000,000  an- 
nually on  the  item  of  wheat  alone. 

It  has  been  remarked  by  a  prominent  man  that  he  examined 
the  records  of  Congress  for  the  last  thirty  years,  and  he  has  not 
seen  one  single  Avord  or  line  indicating  that  an  attempt  has  been 
made  to  establish  and  extend  our  foreign  markets.  This  is  a  sad 
and  humiliating  spectacle  that  the  law-makers  of  this  great  na- 

214 


tion  have  shown  to  the  calling  of  agriculture,  upon  which  the 
greatness  of  this  nation  is  built. 

I  will  quote  from  the  address  of  Col.  B.  F.  Clayton,  president 
of  the  National  Farmer's  Congress,  to  show  how  our  law-makers 
have  disregarded  the  interests  of  the  farmer,  bulwark  of  the  na- 
tion : 

"A  biographical  sketch  of  a  recent  Congress  as  furnished  by 
its  members,  discloses  the  fact  that  out  of  a  membership  of  444 
in  the  Senate  and  House  of  Kepresentatives,  the  farming  element, 
representing  the  majority  of  all  the  people,  have  thirty-five  mem- 
bers in  the  House  and  one  in  the  Senate.  The  chairman  of  the 
Senate  agriculture  committee  records  himself  as  a  lawyer.  The 
only  farmer  on  the  committee  is  at  the  tail  end.  Ten  of  the 
eighteen  members  of  the  House  committee,  including  the  chair- 
man of  the  agriculture  committee,  are  lawyers.  The  only  chair- 
manship held  by  a  farmer  is  on  the  committee  of  "ventilation  and 
acoustics." 

This  gives  an  eloquent  but  humiliating  picture  of  the  way  the 
farmer  is  represented  in  the  hall  of  our  national  legislature. 

The  remedy  for  this  is  to  nominate  farmers  from  agricultural 
districts  in  all  political  conventions,  and  it  will  make  no  differ- 
ence which  political  party  wins,  a  farmer  will  be  elected,  and  a 
friend  of  agriculture  will  be  present  to  work  and  vote  for  meas- 
ures that  will  advance  his  calling.  The  remedy  is  in  the  hands 
of  the  farmer. 

I  will  now  discuss  briefly  another  phase  of  this  question,  which 
deals  direct  with  labor  and  the  farmer,  and  that  is  the  building 
of  our  own  merchant  ships  to  carry  our  products  to  market. 

It  is  a  sad  and  humiliating  spectacle  for  a  great  nation  like 
the  United  States  to  become  compelled  to  permit  foreign  nations' 
ships  to  come  to  our  doors  and  load  up  our  products  for  export 
and  watch  them  bear  away  to  the  world's  markets  the  products 
of  this  great  nation.  Many  nations  boast  of  their  greatness  be- 
cause of  their  commerce  on  the  seas.  Why  cannot  the  United 
States  also  be  rated  as  a  maritime  power?  Is  it  because  we  are  too 
weak  to  engage  in  this  line  of  trade?  Is  it  because  we  have  not  the 
capital  to  engage  in  building  up  a  fleet  of  ships?  Is  it  because 
we  have  no  freight  to  carry  when  built?  Is  it  because  we  lack 
enterprise  and  patriotism?  Is  it  because  we  have  no  idle  work- 
men to  employ  in  such  enterprises?  Is  it  because  the  American 
sailor  is  afraid  of  the  sea?  To  all  of  the  above  questions  we  can 
answer  emphatically  no. 

But  like  all  great  nations  and  enterprises,  often  the  most  im- 
portant matters  of  general  interest  are  lost  sight  of  in  the  mad 

319 


scramble  for  development  and  wealth,  and  there  follows  the  lack 
of  organization  that  would  give  influence  and  backing  to  any  de- 
mand coming  from  sources  of  recognized  character  and  standing. 
This  nation  has  recently  shown  that  it  has  some  claim  for  recog- 
nition as  a  power  on  the  seas.  Its  splendid  victories  in  the  recent 
war  have  been  a  source  of  pride  and.  exultant  joy  to  ourselves  and 
a  revelation  to  jealous  powers,  who  never  thought  the  Yankee 
was  "in  it"  on  the  sea.  "We  have  compelled  the  respect  of  the 
world  to  be  laid  at  this  nation's  feet,  through  the  achievements 
of  our  brave  naval  heroes,  Dewey  and  Schley,  and  the  "men 
behind  the  guns."  No  more  will  the  face  of  the  American  blush 
to  hear  the  insulting  and  contemptuous  remarks  of  foreign  na- 
tions about  interfering  in  the  policies  or  purpose  of  this  great 
nation.  We  find  instead  that  nations  who  have  always  in  the 
past  proved  our  most  inveterate  enemies  have  suddenly  reversed 
themselves  and  are  now  proclaiming  from  the  housetops  that 
they  are  our  great  friends,  and  that  we  are  of  one  blood,  and  all 
that  kind  of  rot.  Don't  you  believe  it.  Do  not  permit  the  advan- 
tage that  has  been  achieved  by  the  valor  of  the  Yankee  in  the 
fields  of  battle  and  in  the  domain  of  enterprise  through  his  own 
energy  and  bravery  to  be  now  surrendered  to  a  nation  hostile 
in  the  past,  but  transformed  into  a  demonstrative  friend  in  the 
present,  caused  by  a  reverence  which  all  the  world  entertains  for 
successful  achievement.  When  we  get  down  to  business  the 
practical  common  sense  of  the  people  will  work  out  the  prob- 
lems that  confront  us,  though  they  be  new  and  novel  to  our  states- 
men. 

One  of  the  nation's  first  requirements  is  a  merchant  marine 
compatible  with  our  dignity  and  importance  as  one  of  the  lead- 
ing powers  of  the  earth.  It  is  our  first  duty  as  citizens,  from 
the  standpoint  of  patriotism,  to  see  that  American  ships  be  built. 
It  should  be  the  aim  of  every  citizen  to  declare  that  our  shipping 
shall  be  restored,  and  restored  as  quickly  as  possible.  It  will 
be  seen  what  advantages  this  will  give  our  nation  and  its  citizens, 
as  it  will  at  once  place  at  our  disposal  in  time  of  war  a  fleet  of 
vessels  that  is  second  only  in  importance  to  the  navy  itself.  A 
great  navy  and  auxiliary  ships  will  be  the  best  guarantee  of 
peace,  as  no  nation  will  be  anxious  to  invite  its  own  destruction 
by  hastily  declaring  war.  Now,  as  a  resource  of  this  nation,  it 
opens  up  the  most  profitable  avenue  of  enterprise  that  is  now 
left  undeveloped.  Our  commerce  on  the  seas  is  as  expansive  as 
the  surface  of  the  earth.  New  markets  can  be  found  and  extended 
that  will  absorb  the  products  of  the  farm  and  manufactured 
products  of  labor.  Eegenerating  our  merchant  marine  will  ere- 

216 


ate  a  new  industry  in  the  United  States,  shipbuilding,  and  a  new 
occupation,  that  of  the  American  sailor.  A  merchant  navy 
would  be  built  by  American  labor  of  American  material,  for 
Americans  to  man  and  navigate.  Then  we  can  earn  the  two 
hundred  million  dollars  which  we  pay  annually  to  the  owners 
of  foreign  vessels  for  doing  our  carrying  trade  for  us.  With  this 
enterprise  thoroughly  established  and  equipped  it  will  take  half 
a  million  men  from  the  ranks  of  idle  labor  and  give  them  perma- 
nent and  profitable  employment,  and  to  the  American  capitalist 
an  avenue  for  investment  for  over  $100,000,000.  Owing  to  the 
generous  treatment  that  foreign  nations  give  their  ships  and 
commerce  we  will  be  at  an  immense  disadvantage  if  we  do  not 
receive  government  aid  in  starting  this  enterprise  for,  the  first 
twenty-five  years  in  the  shape  of  bounties  and  subsidies. 

Let  us  consider  for  a  moment  what  can  be  done  with  a  small 
appropriation  of  say  $25,000,000  annually.  Let  us  pay  a  bounty 
of  $2  per  ton  on  all  freight  of  American  production  and  manu- 
facture. This  to  apply  to  two  ships  of  10,000  tons  capacity 
which  could  leave  our  shores  daily.  Such  ships  leaving  300  days 
each  year  would  give  us  6,000,000  tons  of  American  products 
carried  in  American  ships  to  foreign  markets.  This  would  be 
$12,000,000.  With  the  balance,  $13,000,000,  we  could  establish 
permanent  national  exhibits  of  American  products  which  would 
assist  in  extending  our  trade  in  such  countries.  This  small  ap- 
propriation could  be  taken  from  the  rivers  and  harbors  and  public 
buildings  appropriations  and  scarcely  be  missed,  while  it  would 
give  to  the  neglected  industry  of  agriculture  a  small  measure  of 
the  protection  which  is  so  lavishly  bestowed  on  all  other  interests. 
This  appropriation  will  establish  a  fleet  of  American  ships  for 
the  Pacific  trade  of  about  100  ships  of  10,000  tons  capacity, 
which  would  cost  about  $1,200,000  each.  This  would  call  for  an 
investment  of  over  $100,000,000  in  a  new  enterprise,  which  up 
to  this  time  has  remained  undeveloped,  and  which  is  almost  as 
important  to  the  success  of  agriculture  as  a  market  for  our  sur- 
plus crops.  When  we  have  no  vessels  to  carry  our  crops,  we  are 
almost  as  helpless  as  if  we  had  no  markets. 

When  we  have  to  depend  on  the  favors  of  foreign  nations' 
ships  to  engage  in  the  carrying  of  our  crops  to  market,  which 
may  often  come  in  competition  with  the  products  of  their  own 
country,  our  products  suffer  accordingly.  Then,  when  such  na- 
tions, with  whom  we  have  trade  relations,  shall  be  assured  that 
communication  between  us  and  them  will  be  speedy,  regular  and 
permanent,  and  that  they  can  place  orders  with  us  for  our  prod- 
ucts, they  will  largely  increase  their  orders  for  our  goods.  This 

317 


subsidy  is  absolutely  necessary  to  permit  our  American  ships  to 
compete  successfully  with  foreign  ships  which  receive  such  gen- 
erous aid  from  their  respective  governments. 

Mr.  Hanley  concluded  by  congratulating  his  hearers  on  the 
uprising  of  independent  parties,  and  the  liberalizing  of  the  two 
old  parties,  and  reminded  them  that  the  leaders  of  all  parties  were 
warm  advocates  of  trade  expansion  and  the  restoration  of  our 
merchant  marine. 

As  Mr.  Hanley  sat  down  the  chairman  invited  the  governors 
in  the  auditorium — Stanley  of  Kansas,  Atkinson  of  West  Vir- 
ginia, Pingree  of  Michigan,  Scoville  of  Wisconsin,  and  Poynter 
of  Nebraska — to  seats  on  the  platform.  The  distinguished  dele- 
gates were  warmly  applauded  and  loud  calls  were  made  for  a 
"speech"  from  Governor  Pingree.  He  declined  to  respond. 


AAEON  JONES. 

Grand  Master  National  Grange  Patrons  of  Husbandry. 

Every  citizen  of  this  republic  should  be  free  to  use  his  labor 
a?;  will  best  contribute  to  his  benefit  and  happiness,  not,  however, 
infringing  on  the  rights  of  any  other  citizen. 

The  right  to  acquire,  own,  control  and  enjoy  the  use  and  in- 
come of  property,  is  an  inalienable  right,  that  should  be  enjoyed 
by  each  individual.  Governments  are  organized  and  laws  are 
ena.cted  to  better  protect  life,  liberty,  and  the  ownership  and  use 
of  property.  It  is  the  legitimate  function  of  governments  to  pro- 
tect its  citizens  in  the  full  and  free  enjoyment  of  these  rights. 
It  is  for  this  security  of  life  and  the  ownership  of  property  that 
people  are  willing  to  pay  taxes  for  the  support  of  state  and  na- 
tional governments. 

The  tendency  of  the  times  is  for  conducting  large  business 
enterprises  and  concentration  of  business  into  the  bands  of  a 
few.  In  the  early  history  of  this  country,  when  individuals  de- 
sired to  do  a  more  extended  business  than  they  had  capital  to 
control,  partnerships  were  formed  of  two  or  more,  and  the  busi- 
ness was  conducted  by  them  jointly.  These  partnerships  gave 
them  no  additional  powers  or  privileges  beyond  those  enjoyed  by 
the  individual  citizen. 

As  the  demand  for  concentration  and  the  conduct  of  business 
on  a  still  greater  scale,  the  laws  -provided  for  the  formation  of 


corporations  to  conduct  certain  lines  of  business,  and  the  state 
granted  them  certificates  of  incorporation  with  certain  defined 
privileges  and  the  right  to  conduct  business  along  certain  lines, 
and  in  the  case  of  canals  and  railroads  they  were  granted  the 
extraordinary  power  of  condemning  lands  found  necessary  for 
the  constructions  of  their  roads  or  canals,  and  issue  stock,  limit- 
ing liability  within  certain  limits  defined  by  law,  and  granting 
absolute  control  of  the  minority  of  stock  by  the  majority,  and 
•many  other  advantages  and  privileges  not  enjoyed  by  any  indi- 
vidual citizen.  These  forms  of  corporation  served  a  useful  pur- 
pose, but  within  the  past  few  years  the  ambitions  of  men  to 
acquire  power  and  wealth  rapidly,  these  corporations  have  been 
consolidating  many  separate  corporations  located  in  one  or  sev- 
eral states,  selling  out  their  plants  to  a  corporation  organized  for 
the  purpose  of  buying  up  all  these  separate  plants  and  conduct- 
ing them  under  one  management,  and  it  has  been  found  that  the 
increased  power  possessed  by  these  large  consolidated  corpora- 
tions or  trusts,  as  they  are  commonly  known,  have  caused  them 
to  pursue  a  policy  that  has  infringed  on  the  rights  of  individuals, 
or  have  used  their  influences  in  restraint  of  trade,  been  detri- 
mental to  the  rights  of  labor,  destroyed  the  value  of  other  prop- 
erty, and  deprived  other  individuals  of  the  use  of  their  capital, 
and  so  far  as  this  has  been  done,  is  clearly  against  public  policy; 
and  subversive  of  the  best  interests  of  the  republic.  The  purpose 
of  this  conference,  as  I  understand,  is  to  consider  this  great  ques- 
tion so  vitally  effecting  the  property  rights  of  the  citizens  of  the 
United  States  and  make  such  recommendation  to  the  Congress 
of  the  United  States  and  the  several  legislatures  as  will  secure 
such  legislation  as  will  in  no  wise  cripple  legitimate  enterprise 
and  the  development  of  the  resources  of  our  country,  and  yet 
secure  the  passage  of  such  laws  as  will  restrain  the  abuses  that 
have  grown  up  in  corporate  management  of  the  various  corpora- 
tions now  doing  business  in  the  United  States.  This  is  one  of  the 
most  important  questions  now  confronting  the  American  people 
and  one  that  must  be  met,  and  wisely  met,  or  the  republic  is 
drifting  on  very  dangerous  grounds,  that  sooner  or  later  will  sub- 
vert the  liberties  of  the  people.  We  believe  every  good  and  loyal 
citizen  should  wisely  consider  this  grave  question  and  cast  their 
influence  to  secure  such  legislation,  state  and  national,  as  will 
eliminate  all  the  evil  practices  of  these  so-called  trusts  and  com- 
binations. 

It  occurs  to  me  that  the  first  step  to  be  taken  in  remedial 
legislation  is  to  pass  a  well-considered  anti-trust  law  by  the  Con- 


219 


gress  of  the  United  States,  clearly  defining  what  practices  on  the 
part  of  any  corporation  would  be  injurious  to  public  policy,  and 
cripple  or  injure  individual  enterprise,  thrift,  and  the  acquire- 
ment and  use  of  the  property  of  any  citizen  of  the  republic ;  and 
to  supplement  this  law  by  equally  well-considered  anti-trust  laws 
by  each  of  the  several  state  legislatures  to  reach  and  apply  to  such 
phases  of  the  matter  as  could  not  be  reached  by  the  act  of  Con- 
gress of  the  United  States.  These  laws  should  have  such  provi- 
sions for  their  enforcement  and  provide  penalties  for  violations 
by  fines  or  imprisonment  or  both  as  will  insure  the  compliance 
and  observance  of  the  laws  by  all  corporations  and  combinations. 
To  make  these  laws  effective,  it  is  absolutely  necessary  to  know 
what  these  trusts  and  combinations  are  doing;  and  as  these  trusts 
have  assumed  so  far  as  appearances  go,  to  be  honest,  legitimate 
corporations,  it  is  difficult  to  ascertain  which  ones  are  operating 
in  a  way  detrimental  to  public  policy.  It  would  therefore  seem 
that  these  laws  should  provide  for  government  and  state  inspec- 
tion of  their  business,  of  their  books,  agreements,  receipts  and 
expenditures,  and  that  the  state  may  have  full  knowledge,  the 
right  to  examine  all  vouchers  and  records  of  the  meetings  of 
directors  and  managers;  in  short,  full  and  complete  knowledge 
of  all  the  business  of  affairs  of  the  corporation.  The  individuals 
in  seeking  a  corporation  franchise  have  asked  the  state  to  help 
them  to  a  privilege  or  advantage  they  did  not  possess  as  indi- 
viduals, or  they  would  not  seek  to  be  incorporated  as  a  corpora- 
tion ;  and  on  account  of  that  advantage  granted  and  to  protect  the 
public,  this  inspection  should  be  rigid  and  full.  The  people 
must  know  what  the  specific  acts  are  that  are  against  public  policy 
before  the  laws  can  be  enforced  as  against  them,  and  the  rights 
of  the  public  protected.  Corporations  may  object  to  this  inspec- 
tion on  the  ground  that  it  would  expose  what  they  claim  as  their 
private  business.  In  answer  to  this  it  might  be  said  that  the 
rights  of  the  citizens  of  the  state  who  grant  the  articles  of  incor- 
poration or  allow  them  to  do  business  in  the  state,  special  privi- 
leges, have  a  right  to  know  that  the  privilege  has  not  been  used 
against  public  policy;  besides,  there  is  no  law  now,  never  has  been, 
never  can  be  any  law  compelling  any  one  to  form  a  corporation 
and  invest  his  money  in  any  corporation  enterprise.  Those  who 
invest  in  corporation  stock,  do  so  voluntarily. 

If  the  corporations  are  conducting  legitimate  business,  no 
injury  will  be  done  them  by  inspection.  If  they  are  using  the 
powers  granted  to  them  by  the  state,  to  crush  out  other  enter- 
prises and  deprive  other  citizens  of  the  use  and  value  of  their 
property  in  order  to  avoid  competition;  if  they  are  using  their 

220 


power  and  influence  in  restraint  of  trade;  if  they  are  using  large 
sums  of  money  to  illegitimately  control  political  parties  or  to  con- 
trol legislation,  as  was  testified  before  the  Congressional  investi- 
gation that  the  "Sugar  trust  made  it  a  rule  to  make  political  con- 
tributions to  the  Eepublican  party  in  Republican  states  and  to 
the  Democratic  party  in  Democratic  states."  Mr.  Havemeyer 
testified  that,  "We  get  a  good  deal  of  protection  for  our  contribu- 
tions," and  when  asked  if  his  company  had  not  endeavored  to 
control  legislation  of  Congress  with  a  view  of  making  money  out 
of  such  legislation,  he  answered :  "Undoubtedy.  That  is  what 
I  have  been  down  here  for,"  and  many  other  cases  might  be  cited. 
If  they  have  agreements  with  railroad  companies  for  rebates  of 
freights,  as  has  been  shown  to  be  the  case  in  the  Standard  Oil 
trust  and  many  others,  these  practices  are  most  reprehensible 
and  should  be  punished  by  such  penalties  as  will  effectually  stop 
them.  The  agreements  and  conspiracies  to  depress  the  prices  of 
raw  material  and  staple  products  are  equally  against  public  policy. 

In  speaking  for  the  agricultural  interests  of  our  country,  that 
great  basic  industry  that  produces  70  per  cent  of  the  wealth  of 
the  country,  and  furnishes  60  per  cent  of  the  freight  on  all  rail- 
roads, lake,  river,  and  coastwise  trade,  and  69  per  cent  of  all 
exports,  and  that  make  it  possible  for  the  other  industrial  inter- 
ests of  our  country  to  prosper,  I  desire  to  say,  these  practices  and 
conditions  most  seriously  and  injuriously  affect  it,  and  t^iey  de- 
mand of  the  legislatures  of  the  several  states  and  of  the  national 
Congress,  well  considered  and  effective  legislation  that  will  pre- 
vent the  injurious  practices  of  trusts  and  combinations. 

I  believe  it  to  be  the  settled  purpose  of  a  majority  of  the  peo- 
ple, to  hold  our  representatives  in  Congress  and  in  the  several 
legislatures  personally  responsible  for  the  enactment  of  such 
laws  as  will  restrain  and  prevent  the  continuance  of  acts  of  trusts 
that  are  against  public  policy.  I  do  not  believe  that  the  people 
hold  any  one  party,  as  responsible  for  the  present  conditions,  but 
I  do  believe  that  each  individual  member  holding  official  position 
will  be,  and  is,  held  for  his  voice  and  vote  and  action  in  the  enact- 
ment of  demanded  remedial  and  protective  legislation. 

Our  country  is  so  vast,  its  interests  so  extended,  and  the  con- 
stantly increasing  wealth  in  its  multiplied  forms  of  the  people 
need  carefully  considered  laws  governing  the  rights  and  uses  of 
property,  that  corporations  or  individuals  by  agreements,  may 
not  be  able  to  oppress  or  destroy  any  of  the  great  industries  of 
the  nation.  The  demand  of  the  times  is  for  sound,  sensible,  good 
business  men,  with  broad  common  sense,  to  frame  the  laws  of  our 
country,  state  and  nation. 

221 


JOHN  M.  STAHL. 

Secretary  Fanners'  National  Congress. 

Trusts  are  the  latest  device  for  doing  things  in  a  large  way. 
They  are  the  latest  advance  in  a  steady,  persistent  movement  that 
has  dominated  the  industrial  development  of  the  past  one  hun- 
dred years;  that  has  gathered  the  isolated  workers  with  tools, 
working  alone,  into  shops;  and  then  has  brought  a  score  of  shops 
into  a  factory;  and  has  then  combined  factories;  that  while  thus 
developing  the  factory  system  until  the  result  has  been  well 
termed  an  industrial  revolution,  has  none  the  less  worked  a 
similar  revolution  in  merchandising,  in  transportation,  and  in 
yet  other  lines  of  human  activity,  always  resistlessly  absorbing 
and  combining  to  put  more  men  and  greater  means  under  the 
control  and  direction  of  the  masterful  brain  that  has  reached  the 
place  it  occupies  by  a  civil  service  indisputably  based  on  merit, 
truly  a  "natural  selection"  in  industrv,  always  having  for  its 
object  doing  things  in  a  larger  way,  because  it  is  constantly 
proved  that  this  is  doing  things  in  a  more  economical  way 
(whether,  all  things  considered,  it  is  the  best  way,  I  cannot  dis- 
cuss here).  Hence  the  trust  is  a  logical  phenomenon  in  this 
industrial  development.  Being  such,  it  may  be  destroyed  in 
form,  but  I  do  not  believe  that  it  can  be  destroyed  in  essence.  It 
will  doubtless  be  modified,  in  time  it  will  be  superceded,  and  cer- 
tainly while  it  exists  it  may  and  ought  to  be  directed,  controlled, 
and  made  an  instrument,  not  for  private  gain  alone,  but  for  the 
public  good.  I  believe  that  it  will  be  wiser  for  us,  not  to  seek  to 
destroy  it,  but  to  make  it  our  servant.  We  have  the  machine ;  it 
is  for  us  not  to  try  to  smash  it,  but  to  discover  how  best  to  use  it. 

I  believe  that  anything  that  increases  the  productivity  of 
mankind  is  a  good  thing  and  should  work  good;  that  if  it  does  not 
work  good,  it  is  not  the  fault  of  that  thing  per  se;  that  whatever 
increases  the  productivity  of  human  labor  gives  man  more  to 
enjoy  and  more  time  for  recreation;  that  it  is  a  good,  though  to 
reach  the  ultimate  benefit  of  the  many,  it  may  for  a  time  hurt  the 
few,  as  when  a  new  labor-saving  machine  for  a  time  throws  men 
out  of  employment,  and  therefore  the  trust  ought  to  be  a  good 
thing.  If  so  far  it  has  wrought  ten  times  as  much  harm  as  good 
to  the  people,  as  it  seems  to  have  done,  that  is  not  the  fault  of  the 
trust,  which  certainly  can  exist  without  being  a  monopoly,  but 
because  it  has  been  misused.  I  doubt  if  any  discussion  of  the 
effect  of  industrial  combination  on  the  individual,  for  example, 
will  show  otherwise. 

222 


But  some  men  are  greedy  and  hard,  and  have  little  regard  for 
others.  It  has  been  found  necessary  to  control  many  instruments 
of  industry  that  man's  brain  has  devised — machinery,  factories, 
stores,  banks,  transportation  facilities,  corporations,  insurance — 
in  fact,  very  few,  if  any,  means  of  industrial  or  commercial  ac- 
tivity are  not  more  or  less  controlled  by  law.  To  control  trusts 
by  law  will  not  introduce  any  new  principle.  The  Emperor  Zeno 
found  it  necessary  to  decree  that  all  monopolies  and  combinations 
to  keep  up  the  price  of  merchandise,  provisions,  or  workmanship, 
should  be  prohibited,  upon  pain  of  forfeiture  of  goods  and  per- 
petual banishment.  Blackstone  tells  us  that  "combinations  also 
among  victuallers  or  artificers,  to  raise  the  price  of  provisions  or 
any  commodities,  or  the  rate  of  labor,  are  in  many  cases  severely 
punished  by  particular  statutes;  and  in  general  by  statutes  II 
and  III  of  Edward  VI."  While  the  principle  was  early  estab- 
lished that  government  had  the  right  to  take  cognizance  of  the 
instruments  of  industry,  increasing  experience  and  wisdom 
showed  that  efforts  should  be  to  direct  rather  than  suppress,  and 
probably  it  has  no  more  perfect  flower  than  the  law  that  grew 
out  of  "the  Granger  cases"  of  a  quarter  of  a  century  ago,  which 
demonstrated  that  the  strongest  corporations  are  the  servants  of 
the  state  and  subject  to  its  control.  The  same  application  must 
be  made  to  the  trust,  which  seemed  to  be  a  plant,  not  to  be  rooted 
out  or  to  be  allowed  to  grow  as  a  weed,  but  to  be  cultivated  and 
cared  for  and  trained,  to  increase  the  food  and  clothing  of  man- 
kind. 

Certainly  we  should  lose  no  time  in  taking  control  of  the 
trust,  which  up  to  this  time  has  been  a  great  curse  to  the  Ameri- 
can people. 

Using  terms  in  their  popular  meaning,  the  price  of  an  article, 
which  roughly  indicates  the  difficulty  of  enjoying  it  by  the  people, 
may  be  lowered  in  two  ways :  By  lessening-  the  cost  of  produc- 
tion, or  by  lessening  the  profit  of  the  manufacturer. 

Competition  keeps  down  the  profit  of  the  manuf acttirer ;  and 
by  stimulating  the  discovery  of  methods  and  the  invention  of 
means  that  economize  in  production,  lessens  the  cost  of  produc- 
tion. 

The  trust,  which  is  opposed  to  competition,  lessens  the  cost 
of  production  apparently  even  more  than  competition  does ;  but 
its  avowed  object  has  been  to  hold  up  the  profit  of  the  manu- 
facturer. If,  however,  it  brings  the  price  down  to  the  figure 
made  by  competition,  it  would  appear  to  be  the  better,  since  gen- 
erally it  is  better  to  lower  the  price  by  lessening  the  amount  of 
energy  required  in  production  than  by  lessening  the  profit  of  the 

223 


manufacturer  below  a  certain  point.  If  less  labor  is  required  to 
make  certain  things,  then  men,  working  as  before,  will  have  more 
things  to  enjoy,  or,  having  the  same  to  enjoy,  will  have  more  time 
for  culture  and  recreation;  while  if  .the  manufacturer  has  a 
fair  profit  he  can  pay  fair  wages  and  will  have  increased  capital 
to  be  taxed  and  to  be  used  for  the  employment  of  labor. 

But  if  this  profit  be  excessive  the  result  must  be  evil,  for  so 
much  capital  will  accumulate  in  the  hands  of  the  few  that  it  can, 
and  probably  will,  be  used  to  oppress  the  neople,  corrupt  public 
officials,  and  destroy  good  government.  Certainly  when  trusts, 
instead  of  lowering  prices,  advance  them,  those  trusts  yield  exces- 
sive profits  while  directly  hurting  the  people.  Nearly  all  trusts 
have  advanced  the  prices  of  the  things  the  production  of  which 
they  control.  This  makes  it  imperative  and  urgent  that  they  be 
regulated  by  law. 

The  nature  of  much  of  this  law  to  regulate  trusts  must  be 
decided  upon  after  the  beginning  has  been  made.  Eesults  will 
indicate  further  actions.  I  will,  however,  take  the  liberty  of  sug- 
gesting that  when  a  trust  is  favored  by  artificial  conditions 
created  by  law,  as,  for  example,  a  protective  tariff  (aijd  I  am  and 
always  have  been  a  protectionist),  those  conditions  should  be 
removed.  The  very  existence  of  a  trust  controlling  our  market  as 
to  anything  removes  all  grounds  for  a  protective  tariff  on  that 
article. 

Many  trust  properties  are  capitalized  at  much  more  than 
their  worth.  This  is  unjust  and  dangerous.  It  is  unjust  because 
in  order  that  a  fair  return  may  be  made  on  all  the  capitalization  of 
the  trust,  the  people  are  made  to  pay  too  much  for  a  trust  article. 
It  is  dangerous  because,  first,  selling  large  plants  for  twice  what 
they  are  worth  puts  into  the  hands  of  a  few  a  dangerous  amount 
of  capital;  and,  secondly,  because  the  public  is  led  to  invest  in 
properties  at  an  exaggerated  value  and  collapse  and  panic  and 
hardship  will  ensue.  Hence  a  trust  should  not  be  allowed  to  put 
its  bonds  and  stocks  on  the  market  until  its  properties  have  been 
carefully  investigated  by  public  officials,  whose  minute  statement 
is  open  to  the  public,  and  it  is  found  that  every  dollar  of  bonds 
and  stocks  offered  to  the  public  for  investment  is  backed  by  a  dol- 
lar of  real  value. 

I  will  confess  that  I  tried  hard  to  reach  conclusions  not  so 
favorable  to  trusts  per  se,  as  those  stated.  But  I  am  constrained 
to  write  the  truth,  as  it  is  given  to  me  to  see  it,  knowing  that  any- 
thing in  any  wise  favorable  to  trusts  is  very  unpopular,  especially 
among  farmers.  And  trusts  have  been  so  outrageously  diverted 
from  their  proper  use  and  have  been  so  used  to  rob  the  people, 

224 


that  I  heartily  sympathize  with  the  public  opinion  of  them; 
especially  when  I  come  to  buy  some  trust  article,  fencing  wire, 
for  example.  Further,  I  have  not  a  dollar  invested  in  any  trust 
in  any  way;  and,  more,  so  far  as  I  know,  or  have  reason  to 
suspect,  no  one  that  I  know  has  a  dollar  invested  in  a  trust. 

In  the  weeks  that  I  have  spent  in  Great  Britain — England, 
Wales,  Ireland,  and  Scotland — and  on  the  Continent,  I  have  not 
once  heard  trusts  mentioned  in  conversation,  except  when  I  spoke 
of  them;  and  I  have  seen  them  mentioned  only  twice  in  the 
papers  on  this  side  of  the  Atlantic.  Here  they  are  not  of  public 
interest  or  concern.  This  has  a  deep  significance,  when  one  re- 
members that  the  industrial  revolution  has  been  less  rapid  here. 
There  are  trusts  in  Great  Britain  and  in  the  continental  coun- 
tries, and  apparently  a  protective  tariff  slightly  favors  them,  but 
this  is  by  no  means  certain.  But  certainly  no  trusts  here  have 
robbed  the  people  as  trusts  have  robbed  the  people  of  the  United 
States,  and  I  do  not  believe  that  trusts  would  dare,  in -any 
European  country,  Eussia  and  Turkey  possibly  excepted,  to 
double  and  treble  the  price  of  articles,  while  lowering  wages  and 
discharging  men.  Our  people  are  greater  than  the  trust,  and 
when  it  oppresses  them  beyond  endurance  it  will  be  roughly 
handled,  then  more  wisely  attended  to,  and  ultimately  it  will  be 
used  for  the  public  good. 

J.  STEELING  MORTON. 

Ex-Secretary  Department  pf  Agriculture. 

In  my  letter  to  the  Civic  Federation  July  22d  I  think  I 
sufficiently  indicated  my  opinion  of  the  present  agonizing  solici- 
tude which  seems  to  have  permeated  the  practical  politicians  of 
all  parties  as  to  the  possible  despotisms  and  outrageous  monop- 
olies which  combinations  of  large  capital  may  bring  about  in 
the  United  States. 

But  there  is  no  reason  for  apprehension.  There  can  be  no 
monopoly  if  trade  and  commerce  are  free.  The  combination  of 
millions  of  dollars  in  any  special  manufacture  can  do  no  more  nor 
less  than  compete  with  alert  individual  enterprise  making  the 
same  staple.  And  the  competition  may  make  an  article  of 
equally  good  quality  and  sell  it  at  an  equally  low  price,  and  have 
logically  an  equal  share  of  the  market.  Small  corporations,  even 
copartnerships,  will  be  free  to  enter  every  field  of  competitive 
manufacture  and  commerce  whenever  demand  makes  high  prices 
and  gives  promise  of  profits.  Smaller  concerns  will  seldom  be 

325  • 


overcapitalized.  They  will  seldom  be  extravagantly  managed. 
Many  of  the  larger  combinations,  however,  will  be  threatened 
and  jeopardized  by  overcapitalization  and  extravagant  manage- 
ment. It  will  be  impossible  therefore  to  pay  dividends  upon 
their  common  stock.  That  stock  will  then  soon  have  no  value 
in  the  market,  and  the  "trust"  will  speedily  go  into  bankruptcy. 
The  whisky  and  other  trusts  that  failed  from  these  causes  verify 
this  prognosis.  There  are,  however,  no  "trusts"  in  the  United 
States,  as  trusts  in  their  obnoxious  sense  are  defined,  but  there  are 
many  very  large  corporations.  It  is  impossible  to  prevent  such 
great  corporations,  unless  each  state  repeals  its  general  incorpora- 
tion laws. 

Forty-five  years  ago  I  came  to  Nebraska.  It  was  then  more 
than  three  hundred  miles  from  any  point  within  its  boundaries 
to  a  railroad.  All  capital  was  individual.  There  was  no  corpo- 
ration anywhere  within  the  limits  of  the  territory.  There  were 
very  few  corporations  in  Iowa  or  Missouri. 

The  first  corn  planted  on  the  farm  where  I  lived  in  1855,  and 
have  lived  ever  since,  was  dropped  by  hand  and  covered  with  a  hoe. 
So  was  the  second  crop.  But  the  man  with  the  hoe  has  departed. 
The  village  blacksmith  who  made  hoes  has  been  crushed  out  by 
the  cruel  competition  of  combined  capital.  There  are  to-day  ten 
million  acres  planted  to  corn  in  Nebraska.  It  promises  an  average 
yield  of  thirty  bushels  to  the  acre.  This  will  make  an  aggregate 
of  300,000,000  bushels  for  the  state.  If  the  hoe  and  the  man  with 
the  hoe  who  dropped  the  corn  with  his  fingers  had  never  been  sup- 
planted by  the  double-rowed,  two-horse  corn  planter  and.  in  till- 
age, crushed  out  by  the  double-rowed  cultivators,  such  a  breadth 
of  corn  would  have  been  an  impossibilitv.  Combinations  of  capi- 
tal made  the  corn  planters,  made  the  cultivators,  crushed  out  the 
village  blacksmith,  and  relegated  the  man  with  the  hoe  to  ever- 
lasting inutility. 

But  the  great  multitude  of  mouths  which  consume  food  made 
from  corn  get  this  food  at  a  less  price  than  they  ever  did  before 
and  for  a  very  small  per  cent  of  what  the  cost  of  corn  food  would 
have  been  at  this  time  if  it  had  continued  to  be  planted  and  cul- 
tivated by  a  man  with  a  hoe. 

These  examples  are  illustrative  of  the  fact  that  all  these  great 
combinations  of  capital,  while  they  mav  put  out  of  employment  a 
vast  number  of  traveling  men  and  others  differently  employed, 
they  also  reduce  competitive  waste.  The  traveling  men  and  all 
their  expenses  have  been  paid  invariablv  by  the  consumers  of  the 
goods  which  they  sold.  The  entire  advancement  and  improve- 
ment of  the  industrial  world  are  marked  by  the  wrecks  and  ruins 


of  individuals,  but  illuminated  and  glorified  by  the  advantages 
which  they  have  given  to  the  multitude. 

The  West  has  been  opened  up  by  combinations  of  capital. 
The  means  of  production,  all  the  improved  implements  for  plant- 
ing and  tillage,  all  the  perfected  machinery  for  the  speedy  har- 
vesting and  storing  away  of  crops,  together  with  their  accelerated 
cheap  distribution  by  rail,  make  this  fertile  West  inhabitable  and 
prosperous.  But  if  there  had  been  no  incorporation  of  money 
out  of  which  to  evolve  manufactories  for  improved  and  cheaper 
agricultural  implements  and  machinery,  these  crops,  which  now 
astound  the  world  with  their  magnitude  and  money  value,  would 
never  have  been  grown  west  of  the  Missouri  river.  And  even  if 
they  could  have  been  grown  without  the  direct  power  and  influ- 
ence of  improved  machinery,  they  could  never  have  been  cheaply 
distributed  to>  the  markets  of  the  world,  unless  there  had  been 
further  incorporations  of  capital  to  build  and  operate  railroads. 

The  state  of  Nebraska  is  swiftly  paying  off  all  of  its  land  mort- 
gages. These  mortgages  largely  represent  the  purchase  money. 
Originally,  prior  to  the  alleged  "crime  of  1873,"  mortgages  upon 
these  farms  carried  from  40  per  cent  down  to  12  per  cent  interest 
per  annum.  The  latter  figure  was  regarded  exceedingly  low' and 
quite  favorable  to  the  borrower.  But  to-day,  upon  the  same 
number  of  acres  of  land,  three  times  the  amount  of  money  can 
be  borrowed  that  would  have  been  loaned  on  the  same  security 
in  1870  and  1871,  and  the  rate  of  interest  is  now  6  and  5  per  cent 
per  annum. 

By  combinations  of  capital  the  railways  have  been  doubled  as 
to  their  mileage  in  the  last  fifteen  years.  Instead  of  their  mort- 
gage bonds  bearing  8  per  cent,  they  now  carry  only  4  per  cent. 
Thus,  instead  of  seeing  great  possible  evils  in  incorporations  of 
capital  for  the  future,  it  is  better  to  contemplate  and  verify  the 
great  good  which  has  come  to  the  country  because  of  capitalistic 
combinations  in  the  past. 

The  word  "trust,"  as  used  by  partisans,  particularly  those  who 
are  endeavoring  to  organize  the  discontent  of  the  United  States 
against  the  courts,  and  the  laws  as  construed  by  the  courts,  is 
given  a  sinister  significance.  Without  any  attempt  at  analysis, 
definition  or  explanation,  every  combination  for  investment  of 
capital,  of  whatsoever  kind,  is  denounced  as  a  "trust."  This  is 
merely  an  appeal  to  envy,  malice,  and  the  other  meaner  charac- 
teristics of  humanity.  Originally,  however,  the  word  "trust"  was 
defined  as  "a  beneficial  interest  in  land  or  other  property,  the 
legal  title  to  which  is  in  another,  recognized  and  enforced  by  the 
courts  of  equity." 

227 


Having  observed  individual  capital  carrying  on  business  in 
Nebraska  prior  to  its  invasion  by  a  single  corporation ;  and  subse- 
quently having  experienced  the  change  of  cost  made  in  the  same 
business  when  taken  up  by  incorporated  capital,  and  noted  par- 
ticularly the  reductions  in  transportation  as  charged  by  stage 
coaches  and  ox  and  mule  trains,  when  compared  to  rates  charged 
by  passenger  and  freight  trains  on  railways,  one  is  rejoiced  at  the 
advent  of  the  money  power  and  the  agents  of  capital  into  this 
wilderness.  The  cost  of  carrying  100  pounds  of  freight  from 
Nebraska  City  to  Denver  by  mule  or  ox  trains  was  from  $5  to 
$12.  Freight  between  the  same  points  to-day  is  50  cents  per 
hundredweight.  Passenger  fare  from  Nebraska  City  to  Denver 
by  coach  was  $150;  by  rail  to-day  it  is  $17.  For  a  seat  in  the 
coach  from  Nebraska  City  to  Salt  Lake  Citv  one  paid  $300 ;  the 
rate  by  rail  to-day  is  $30.  Steamboat  rates  from  St.  Louis,  by  the 
Missouri  river,  were,  on  freight,  from  75  cents  to  $4  per  hundred- 
weight (the  steamboats,  however,  were  not  owned  by  corpora- 
tions), and  passenger  fare  was  $30. 

Combinations  of  capital  for  vast  production  and  distribution, 
while  they  may  have  destroyed  small  dealers  in  great  numbers, 
have,  as  a  rule,  ultimately  benefited  the  great  majority  of  man- 
kind. The  present  tendency  toward  large  aggregations  of  money 
for  the  purpose  of  carrying  on  manufacture,  commerce,  and  trans- 
portation, may  therefore  be  not  dangerous  to  the  millions  of  con- 
sumers who  may  thus  be  furnished  more  bread  and  more  clothing 
for  less  hours  of  labor. 

The  consummate  perfection  of  civilization  will  be  realized  in 
the  lowest  possible  prices  for  all  the  staples  of  life.  The  cheaper 
all  staple  commodities  become,  the  less  hours  of  efforts  and  exer- 
tion will  each  member  of  the  human  family  be  obliged  to  put 
forth  in  order  to  maintain  and  clothe  himself.  The  more  leisure 
the  mass  of  mankind  may  have  from  bodily  effort,  the  more  time 
they  may  bestow  upon  intellectual  development  and  moral  cul- 
ture. High  prices  are  not  a  boon  to  mankind.  High  prices 
always  prevail  in  newly-settled  and  crude  communities.  The 
lowest  prices  will  be  at  hand  when,  by  combinations  of  skill  and 
capital,  mankind  shall  have  reached  the  ultima  TJiule  of  cheap 
production  combined  with  speedy  and  cheap  distribution. 

By  protective  tariff  advocates,  paternalism  has  been  preached 
in  the  United  States  for  many  years.  Out  of  protection  many 
monopolies  have  been  evolved.  When  protection  shall  have  been 
abolished  many  will  die. 

Free  trade  will  not  compel  anybody  to  trade  anywhere,  but 
will  permit  everybody  to  trade  everywhere.  Under  free  trade 

228 


monopolies  can  not  be  long-lived.  Under  free  trade  the  homeo- 
pathic maxim  that  "like  cures  like,"  may  be  verified  by  killing 
off  one  combine  with  another  combine,  and  by  organizing  syndi- 
cate against  syndicate  for  intense  competition,  thus  keeping 
prices  and  profits  at  a  minimum. 

Trusts  which  are  over-capitalized  are  born  of  the  machinations 
of  shallow  and  impractical  men.  They  will  fail  and  no  one  be 
harmed  except  those  whose  credulity  led  them  to  invest  in  their 
securities. 

There  is  much  misapprehension  as  to  incorporated  capital  in 
the  United  States.  Oratorical  vagarists  have  endeavored  to  make 
common  people  believe  that  incorporations  are  not  subject  to 
economic  laws  of  competition  and  that  the  relation  of  supply  to 
demand  is  not  the  sole  regulator  of  values.  The  fact,  however,  re- 
mains that  money  invested  in  manufactories  or  in  railroads  be- 
longing to  incorporations  is  no  stronger,  no  better  and  no  more 
exempt  from  the  operation  of  commercial  laws  than  the  money 
which  is  owned  by  individuals.  There  need  be,  in  my  judgment, 
no  apprehension  as  to  the  trusts  crushing  out  all  competition. 
With  the  exception  of  the  oil  trust  and  the  sugar  trust,  failure 
among  trusts  has  been  universal.  The  whisky  trust,  the  tobacco 
trust  and  all  the  other  trusts  of  any  importance  up  to  date,  except 
those  that  have  been  formed  very  recently,  have  been  complete 
failures.  These  failures  have  come,  firstly,  from  over-capitaliza- 
tion; and,  secondly,  from  mismanagement.  Intelligent  competi- 
tion can  enter  the  field  against  any  trust  on  earth  except  one  which 
has  a  natural  monopoly  (by  this  I  mean  one  which,  like  the 
Standard  Oil  Company,  owns  the  only  oil-producing  lands  in  the 
country),  and  successfully  put  its  products  upon  the  market  with 
the  sympathy  of  the  consumer  all  on  its  side.  By  this  I  mean 
that  outside  of  the  trusts  co-partnerships  and  stock  companies 
may  be  formed  with  capital,  energy  and  ability  to  successfully 
take  the  market  against  any  and  all  trusts'  products,  except  those 
which  are  the  result  of  a  natural  monopoly. 

Enactments  will  not  cure  the  tendency  toward  combines. 
Economic  laws  will  rectify  their  errors  and  protect  the  people. 
Whenever  legislatures  invade  the  domain  of  economic  laws  with 
statute  laws,  they  merely  show  the  power  and  majesty  of  the 
former  and  italicize  the  feebleness  and  littleness  of  the  latter. 
Too  much  legislation  begot  all  the  real  and  all  the  possible  evils 
which  combinations  of  capital,  even  under  a  protective  tariff,  are 
capable  of  inflicting.  "Let  alone"  trade,  manufacture  and  dis- 
tribution are  good  servants  to  all  the  people.  Favored  by  special 
privileges  they  may  become  servants  to  the  few  and  masters  of 

229 


the  many.     The  less  legislation — after  repealing  the  protective 
tariff — about  restraining  capital,  the  better. 

Of  course,  it  is  fashionable,  it  is  epidemic,  to  denounce  all 
large  aggregations  of  capital  as  "trusts."  This  mania  will  at  la=t 
exhaust  itself  and  the  country  will  find  that  those  who  have  been 
damaged  by  trusts  were  those  who  bought  their  securities  for 
more  than  they  were  worth. 

CYRUS  G.  LUCE. 

Ex-Governor  of  Michigan. 

As  a  lifelong  farmer  I  crave  a  few  moments  of  your  valuable 
time  'to  present  the  interests  of  that  great  portion  of  the  American 
people  that  are  engaged  in  agricultural  pursuits. 

Much  attention  has  been  given  by  this  conference  to  schemes 
and  methods  that  are  intended  to  increase  our  exports.     With  all 
proper  efforts  in  this  direction  we  are  in  hearty  sympathy.     Our 
enormous  exports  of  the  last  few  years  have  been  the  wonder  of 
the  civilized  world.     We  have  surprised  ourselve*  bv  their  mag- 
nitude.    We  have  forced  a  great  balance  of  trade  in  our  favor. 
We  have  loaded  ships  with  gold  coming  from  other  nations  to  our 
shores.     These  conditions  have  contributed  largelv  to  the  present 
prosperous  condition  of  eur  own  country.     It  is  well  to  pause  and 
reflect  upon  the  sources  from  whence  these  exports  come.    Be- 
ginning with  1892.  and  coming  down  to  the  present  hour,  nearly 
eighty  per  cent  of  the  products  that  have  produced  these  vast 
sums   have   been   wrung  from   the  brown    soil.     In  faith   the 
American  farmer  has  sown  and  planted.     He  has  with  indu«trv 
cultivated  and  with  rejoicing  harvested  the  wheat,  cotton  and 
corn  that  has  gone  abroad  to  feed  and  clothe  the  people  of  other 
nations.     He  has  reared,  watched,  cared  for  and  fed  the  herd? 
and  flocks  that  have,  together  with  the  grain  and  cotton,  loaded 
the  cars  and  the  vessels  that  have  brought  profits  to  the^owners 
of  railroads  and  steamships.     He,  with  the  necessity  of  his  prod- 
ucts, stands  as  a  breastwork  against  the  danger*  of  foreign  wars. 
In  the  consideration  of  questions  that  affect  the  welfare  of  the 
nation  none  are  entitled  to  greater  or  more  candid  attention,  and 
vet  during  all  the  discussions  here  he.  with  his  great  contribu- 
tion to  the  general  welfare,  has  occupied  ju't  twentv  minute*  of 
your  time.     His  interests  were  championed  and  his  views  pre- 
sented grandly  and  noblv  by  the  master  of  the  "National  Orange, 
and  t4iat  was  all.     His  interests  have  not  been  directlv  attacked, 
but  by  all  others  quietly  ignored.     I  do  not  say  this  to  complain, 

230 


but  to  intimate  to  you  the  modesty  of  those  engaged  in  this  giant 
pursuit.  But  with  all  this  modesty  we  are  not  disinterested  lis- 
teners to  the  discussions  of  the  trust  question,  nor  are  we  ignorant 
of  the  tendency  of  the  times  nor  of  the  inclination  to  unite  cor- 
poration with  corporation  until  they  have  become  a  threatening 
menace  to  their  interests.  We  are  not  unfriendly  to  the  ordi- 
nary corporation  where  other  corporations  can  exist  as  competi- 
tors in  the  production  of  goods,  articles  and  implements  in  the 
same  line.  While  human  nature  remains  the  same  we  do  not 
and  can  not  believe  that  it  is  safe  to  lodge  in  the  hands  of  one 
man  or  set  of  men  the  power  that  would  be  given  him  by  union 
of  all  the  corporations  under  one  management  engaged  in  the 
production  of  any  one  line  of  goods.  It  is  idle  to  claim,  as  some 
men  do,  that  these  men,  clothed  with  such  unlimited  power, 
would  suddenly  become  so  good,  just  and  humane  that  he  would 
mete  out  even-handed  justice  to  all.  He  would  create  a  mo- 
nopoly in  his  line;  he  would  force  down  the  price  of  articles  that 
hd  must  purchase  and  put  up  the  price  of  products  that  he  makes 
for  sale.  This  prophecy  is  made  with  some  knowledge  of  human 
nature  and  the  policy  pursued  in  this  and  other 'generations.  But 
more  than  this,  we  have  the  evidence  of  practical  demonstrations 
by  every  day's  occurrence  at  the  present  time.  The  modern 
trust  is  comparatively  new  in  its  existence  and  operations,  but  in 
all  cases  where  it  is  fairlv  on  its  feet  it  is  doing  and  undertaking 
to  do  the  very  things  that  we  have  predicted  it  will  do.  Of  the 
hundreds  of  articles  that  the  trust  has  been  able  to  control,  prices 
have  been  advanced  in  nearly  all  cases;  still  it  is  claimed  with 
great  confidence  that  the  advance  in  price  grows  out  of  the  gen- 
eral tendency  of  events.  But  is  it  not  a  singular  coincidence 
'that  the  price  so  suddenly  advances  as  soon  as  the  trust  secures 
control?  It  is  freely  and  gladly  admitted  that  labor  is  securing 
an  advance  in  wages,  but  this  is  slight  compared  with  the  advance 
in  the  price  of  trust-made  articles.  Now,  if  it  is  true  (and  more 
than  possibly  it  is)  that  these  mammoth  combinations  produce 
and  place  on  the  market  their  goods,  wares  and  implements  at 
lower  prices  than  the  ordinary  corporation  can  where  competition 
exists,  where  do  all  the  increased  profits  go?  Who  is  getting 
them?  They  very  likely  save  enough  by  their  improved  methods 
in  making  and  selling  to  pay  all  the  advances  made  to  the  labor- 
ers, and  this  would  leave  the  enhanced  prices  secured  for  prod- 
ucts to  pay  increased  dividends  to  the  stockholders.  Among  all 
who  have  made  a  defense  or  a  quasi  defense  no  one  has  given  any 
other  solution  of  this  question,  hence  the  conclusion  reached  is  a 
safe  one.  All  corporations  have  not  yet  formed  themselves  into 

231 


trusts,  but  it  is  safe  to  conclude  that  all  who  can,  seeing  the 
increased  profits  secured  by  those  who  have  united  their  forces, 
will  be  inclined  to  do  so,  and  others  will  be  compelled  to  do  so 
or  die.  And  this  justly  causes  great  apprehension  upon  the  part 
of  the  American  farmers.  I  do  not  see  how  it  is  possible  for 
them  to  unite  in  a  counter  trust  these  great  producers  of  the 
world's  wealth.  I  know  that  some  with  a  more  vivid  imagina- 
tion than  I  possess  have  conceived  the  project.  I  can  readily  see 
how  labor  can  respond  to  the  appeals  made  here  and  elsewhere  to 
unite  and  join  forces  with  the  great  productive  combinations, 
but  how  the  farmers  can  do  so  is  beyond  my  imagination.  But 
even  if  they  can  form  one  so  comprehensive  and  so  perfect  in  its 
operation  that  they  shall  be  enabled  to  absolutely  control  produc- 
tion and  prices,  with  my  present  ideas  of  human  nature  I  am 
afraid  that  in  too  many  cases  the  children  of  the  poor  would  go 
supperless  to  bed.  It  is  neither  here  nor  there  a  safe  power  to 
place  untrammeled  in  the  hands  of  any  one  man  or  set  of  men. 
But  if  the  trust  reaches  the  height  of  its  ambition,  the  great  army 
engaged  in  agricultural  pursuits  will  be  driven  to  desperation. 
The  tendency  will  inevitably  be  to  force  them  through  a  trust 
or  otherwise  to  reduce  production,  to  cease  in  their  efforts  to  load 
the  cars  and  vessels  as  bounteously  as  before,  they  will  cease  to 
purchase  as  generously  as  in  the  past.  In  this  many  others  will 
suffer  as  well  as  they.  This  is  no  fancy  picture,  and  far  be  it 
from  a  threat,  but  it  is  believed  to  be  the  inevitable  result  of 
operating  causes,  and  the  conclusion  is  drawn  from  the  fact  that 
in  all  the  relations  of  life  and  positions  occupied  men  usually 
exercise  all  the  power  and  authority  lodged  in  their  hands.  This 
is  just  as  true  in  America  as  in  any  other  land.  We  do  not 
clothe  the  President  or  the  Governors  of  states,  the  Congress  or 
state  Legislatures,  or  even  the  courts,  with  unlimited  power.  "We 
do  not  permit  any  of  these  to  discharge  duties  at  their  own  sweet 
wills,  but  they  are  hedged  about  by  constitutional  provisions  and 
by  legal  enactments  and  somehow  or  in  some  way  these  mighty  cor- 
porations known  as  trusts  must  be  checked,  trammeled,  restrained. 
In  all  my  acquaintance  I  know  of  no  farmer  who  feels  safe  in  the 
prosecution  of  his  calling  without  placing  restraint  upon  them. 
In  the  incorporation  of  corporations  they  make  bold  claims  not 
for  the  public,  perhaps,  in  relation  to  what  they  can  and  expect 
to  do.  ISTo  better  or  more  dangerous  illustration  can  be  given 
than  the  one  presented  to  the  woollen  manufacturers,  and  the 
same  claim  is  made  and  presented  as  an  inducement  to  the  manu- 
facturers of  leather  and  of  its  products.  They  or  their  promot- 
ers claim  that  when  they  are  properly  organized  and  in  working 

232 


HOWARD  S.  TAYLOR 
AZEL  F.   HATCH 
FRANCIS  B.  THURBER 


WILLIAM  FORTUNE 
EDWARD  C.  AKIN 
JEREMIAH  W.  JENKS 


condition  that  one  man  can  buy  all  the  wool  in  America,  fixing 
their  own  prices  without  fear  of  competition.  Another  man  can 
sell  all  the  cloth  made  by  all  the  factories,  limiting  the  products 
and  fixing  prices.  All  this  may  never  be  realized,  but  it  is  the 
scheme  desired  and  presents  a  glowing,  fancy  picture.  We  con- 
ceived the  difficulty  in  devising  and  executing  remedies  for  these 
present  and  prospective  evils.  Absolute  publicity  and  oversight 
is  good  as  far  as  it  goes.  Absolute  prevention  of  discrimination 
in  freight  rates  will  help  in  some  cases.  A  modification  or  re- 
peal of  the  tariff  on  trust-made  articles  will  aid  in  other  Cases. 
But  in  spite  of  these  suggested  remedies  the  trust  will  continue 
to  live,  thrive  and  monopolize.  Nothing  short  of  a  united, 
determined  public  opinion  in  opposition  to  the  monopolizing 
power  of  the  trust  will  conceive  and  execute  efficient  remedies. 
While  the  farmers  themselves  entertain  decided  opinions  in  rela- 
tion to  the  central  question,  yet  because  of  their  generally  isolated 
condition  and  want  of  organization  they  do  not  contribute  toward 
molding  public  opinion  in  proportion  to  their  numbers  and  the 
magnitude  of  their  contributions  to  society.  They  seldom  secure 
seats  in  Congress,  and  only  occasionally  anything  like  a  majority 
in  Legislatures.  Hence  we  make  an  earnest  appeal  to  all  the 
agencies  that  contribute  so  largely  to  forming  public  opinion  for 
the  enactment  and  enforcement  of  just  laws.  We  ask  no  special 
favors,  but  demand  even-handed  justice  and  exemption  from 
threatened  dangers.  We  desire  to  live  and  let  live.  Our  purpose 
is  not  to  tear  down,  but  build  up.  We  ask  for  no  acts  of  incorpo- 
ration for  ourselves  or  our  interests,  but  we  do  insist  that  if  other 
interests  are  incorporated  that  ours  shall  be  sacredly  guarded  and 
safely  protected.  This  claim  is  not  made  solely  for  ourselves, 
but  in  behalf  of  all  the  great  interests  of  the  republic.  Without 
reasonably  prosperous  agriculture  other  interests  can  not  prosper: 
Farmers  are  quiet,  unobtrusive  citizens,  but  they  are  not  cowards, 
as  has  been  attested  in  peace  and  in  war.  The  farmers  fired  the 
first  shot  in  the  great  conflict  that  gave  to  us  liberty,  independ- 
ence and  power.  That  liberty  they  still  enjoy  and  highly  prize. 
They  do  not  believe  that  the  trust  has  or  will  become  so  great  in 
strength  and  power  that  it  can  not  be  overthrown,  hence  they 
have  no  sympathy  with  the  sentiments  that  it  has  come  to  stay 
and  can  not  be  dislodged  from  power.  And  the  more  speedily 
and  effectually  attempts  to  carry  out  its  purposes  the  more  cer- 
tainly will  it  be  overthrown.  The  ballot  box  is  the  natural  place 
for  the  American  people  to  fight  their  battles,  and  I  am  sure  that 
the  farmers  will  be  there. 


233 


A.  KttAPP. 

Chairman  Interstate  Commerce  Commission. 

The  purpose  of  this  brief  paper  is  to  suggest  a  phase  of  the 
general  subject  which  is  quite  commonly  overlooked.  In  dealing 
with  the  trust  problem  there  is  frequent  failure  to  distinguish  the 
activities  engaged  in  private  pursuits  from  the  agencies  employed 
in  public  .service.  The  restraint  of  competition  among  railway 
carriers,  for  example,  is  often  opposed  on  the  same  grounds  and 
with  the  same  arguments  as  are  relied  upon  to  prove  the  danger- 
ous consequences  of  restricting  competition  in  the  fields  of  indus- 
trial production. 

But  there  is  a  fundamental  difference,  I  maintain,  between 
those  combinations  in  private  business,  the  formation  of  which 
is  of  such  recent  and  rapid  growth,  and  associated  action  by  those 
who  furnish  the  means  of  public  transportation.  This  difference 
may  be  stated  in  a  single  paragraph.  As  regards  actual  prop- 
erty, the  products  of  labor  and  skill  in  any  vocation,  the  things 
we  eat  and  wear  and  use,  we  do  not  want — under  present  economic 
conditions  at  least — uniformity  of  price.  Every  producer  should 
be  perfectly  free  to  sell  for  all  he  can  get,  every  purchaser  equally 
free  to  buy  just  as  cheap  as  he  can.  The  dealer  should  always  be 
at  liberty  to  make  one  price  to  one  person  and  another  price  to 
another  person,  or  to  vary  the  price  to  the  same  person  as  and 
when  he  sees  fit.  That  is  to  say,  in  the  exchange  of  goods  there 
should  be  the  utmost  freedom  of  contract  between  the  parties. 
As  between  buyer  and  seller  the  power  to  bargain  should  be  unre- 
strained, for  in  that  power  is  the  essence  of  commercial  liberty. 
Therefore,  speaking  in  general  terms,  whatever  tends  to  abridge 
this  freedom  of  contract  and  so  to  bring  about  uniform  or  non- 
competitive  prices,  whether  by  limiting  production  or  controlling 
the  markets,  is  to  be  deprecated  as  on  the  whole  against  the  pub- 
lic interest.  For  this  reason,  legislation  which  checks  this  ten- 
dency and  promotes  industrial  freedom  may  well  be  regarded  as 
defensible  and  necessary. 

But  as  respects  public  transportation,  which  is  not  property 
at  all,  but  a  service,  not  a  commodity,  but  a  function  or  agency  of 
government,  we  do  want  uniform  charges — under  like  conditions 
— without  preference  or  exception  to  any  person.  Rightly  con- 
sidered, the  tolls  paid  to  the  public  carrier  are  in  the  nature  of  a 
tax,  and  the  relations  between  carriers  and  the  public  are  not  con- 
tract relations,  save  in  a  very  limited  sense  and  for  special  pur- 
poses. I  do  not  procure  transportation  as  the  result  of  a  bargain 

234 


with  the  carrier,  but  in  the  exercise  of  my  political  rights.  The 
right  to  that  transportation  is  primary,  indispensable  and  inalien- 
able. The  essential  element  of  this  right  is  equality.  The 
privileges  I  enjoy  as  a  citizen  in  this  regard  are  precisely  the  same 
in  every  respect  as  those  possessed  by  any  other  citizen  under  like 
circumstances,  and  impairment  of  those  privileges  is  a  depriva- 
tion of  like  character  and  scarcely  less  serious  than  restraints 
upon  my  personal  freedom  or  the  denial  of  protection  to  my  prop- 
erty. Therefore,  whatever  promotes  stability  and  uniformity  of 
charges  by  public  carriers,  whatever  tends  to  secure  equality  of 
right  in  the  use  of  transportation  agencies,  should  be  encouraged 
and  promoted.  Indeed,  I  go  to  the  extent  of  saying  that  we  can- 
not have  that  free  and  fair  competition  in  the  fields  of  production, 
which  is  the  condition  of  industrial  freedom,  without  methods 
and  charges  for  public  transportation  which  amount  to  a  mo- 
nopoly. 

The  benefits  supposed  to  result  from  railroad  competition  I 
believe  to  be  greatly  exaggerated.  Those  who  honestly  uphold 
the  present  policy — to  sa}r  nothing  of  those  who  oppose  a  change 
from  unworthy  motives — apparently  assume  that  the  public  gets 
the  same  advantage  from  competition  between  carriers  as  from 
competition  between  producers  and  dealers  generally.  That  this 
is  a  mistaken  and  fallacious  view  I  am  fully  persuaded.  I  do  not 
see  how  any  one  can  derive  benefit  from  competition  in  the  mat- 
ter of  his  daily  wants,  unless  he  is  in  a  situation  to  choose  freely 
between  two  or  more  persons  who  are  each  able  to  supply  those 
wants.  The  objective  value  of  competition,  I  submit,  rests  in 
the  power  of  selection,  and  he  who  is  debarred  from  choice  must 
be  deprived  of  any  direct  advantage  from  the  rivalry  of  others. 

As  to  most  of  our  ordinary  wants — broadly  speaking — every 
person  in  every  place  has  the  opportunity  to  choose.  If  the  only 
merchant  in  a  remote  hamlet  charges  more  for  his  wares  than  his 
customers  are  willing  to  pay,  there  is  another  store  at  a  near-by 
cross-roads  where  they  can  purchase  the  same  commodities;  and, 
like  liberty  of  selection,  is  commonly  enjoyed  as  to  the  various 
needs  of  social  life,  whether  simple  or  complex.  But  in  respect 
of  railroad  transportation  only  a  few  people  comparatively  are  so 
situated  as  to  have  any  available  choice  between  carriers.  So 
that,  without  amplifying  the  argument,  the  simple  fact  is  that 
only  a  small  percentage  of  population,  and  an  exceedingly  small 
fraction  of  territory,  are  so  located  as  to  have  any  practical  op- 
portunity for  selection  in  the  matter  of  public  conveyance.  To 
the  great  majority  of  people  railway  transportation  is  now  a  vir- 
tual monopoly.  I  do  not  mean  to  say  that  the  competition  be- 

235 


tween' railroads  connecting  great  cities  by  different  lines  has  not 
had  an  indirect  and  important  influence  upon  railroad  charges  at 
intermediate  points  which  are  dependent  upon  one  of  those  lines 
alone;  but  I  venture  the  opinion — again  speaking  broadly — that 
the  limit  of  such  indirect  advantage  has  already  been  reached, 
and  that  further  benefit  from  that  source  cannot  reasonably  be 
expected.  The  result  is  that  a  few  commercial  centers  and  a  few 
large  shippers,  having  this  power  of  choice,  and  finding  their 
traffic  indispensable  to  the  carriers,  secure  enormous  advantages, 
either  by  evasion  or  violation  of  law,  of  which  the  masses  are  de- 
prived. It  is  entirely  plain  to  me,  therefore,  that  co-operative 
methods,  the  general" discontinuance  of  competition  in  rates  be- 
tween rival  railroads,  would  tend  strongly  to  remove  the  inequali- 
ties which  now  exist,  and  prove  a  positive  and  substantial  ad- 
vantage to  the  great  majority  of  producers  and  consumers.  And 
I  firmly  believe  that  while  there  is  a  popular  objection  to  railroad 
pooling,  as  it  is  commonly  called,  founded  largely  upon  ignorance 
of  its  purpose  and  misconception  of  its  effects,  the  principal  oppo- 
sition to  legalized  co-operation,  the  opposition  which  has  thus  far 
prevailed,  comes  from  the  favored  few  who  are  reaping  unearned 
profits  by  the  discriminating  practices  which  they  virtually  com- 
pel and  of  which  they  are  the  sole  beneficiaries. 

In  harmony  with  this  view,  as  I  conceive,  is  another  sugges- 
tion. The  opposition  to  trusts,  so  far  as  it  is  sincere  and  intel- 
ligent, seems  to  be  based  largely  upon  belief  that  they  do,  or  ap- 
prehension that  they  will,  so  use  their  combined  power,  and  the 
degree  of  monopoly  thereby  secured,  as  to  obtain  extortionate 
prices  from  the  consumer,  or  at  least  higher  prices  than  would 
otherwise  prevail.  The  demand  for  laws  to  prevent  these  com- 
binations arises  from  our  inability  to  control  by  legislation  the 
prices  of  industrial  products.  We  cannot  by  law  fix  the  price  of 
sugar,  petroleum,  cotton  cloth  or  any  other  commodity.  And  if 
we  could  we  should  be  powerless  to  compel  their  sale  in  any  case 
at  the  price  so  fixed.  Therefore,  since  the  apprehended  evils 
cannot  be  reached  by  direct  legislation,  we  seek  to  accomplish  the 
desired  end  by  the  indirect  means  of  preventing  the  combination, 
and  these  indirect  means  must  be  resorted  to  because  no  others 
are  available. 

But  this  difficulty  does  not  exist  in  respect  of  prices  or 
charges  for  public  transportation,  for  those  charges  are  under 
direct  and  complete  legislative  control.  Within  limitations 
which  secure  to  the  owners  of  railway  property  the  equal  protec- 
tion of  the  laws  and  prevent  the  taking  of  such  property  without 


236 


due  process  of  law,  being  the  same  limitations  as  are  applied  to  all* 
n^i-htion.  the  power  of  Congress  and  of  the  several  states  in 
their  ivspi-criivo  spheres — either  by  direct  action  or  through  the 
medium  of  commissions — to  control  and  prescribe  the  charges  for 
public  carriage  is  plenary  and  exclusive.  This  .being  so,  the 
above  mentioned  objections  to  industrial  combination  are  mainly, 
if  not  wholly,  untenable  in  the  case  of  railway  combinations. 
The  end  desired,  viz.,  protection  of  the  public  against  unreason- 
able charges,  can  be  secured  by  direct  legislation,  and  hence  there 
is  no  occasion  for  employing  the  indirect  method  of  preventing 
the  combination.  And  if  the  right  to  equal  treatment  in  all  that 
pertains  to  transportation  service  will  be  better  secured,  as  un- 
questionably it  would  be,  by  allowing  and  legalizing  association  of 
public  carriers,  our  legislative  policy  should  be  shaped  accord- 
ingly. So  far  as  railway  service  is  concerned,  the  practical  choice 
lies  between  competition  on  the  one  hand,  with  the  inevitable  out- 
come of  discriminations  which  favor  the  few  at  the  expense  of  the 
many,  or  like  charges  for  like  service,  which  can  be  realized  only 
by  permitting  and  encouraging  co-operative  action  by  rival  roads. 
The  power  to  compete  is  the  power  to  discriminate,  and  it  is  sim- 
ply out  of  the  question  to  have  at  once  th.3  absence  of  discrimina- 
tion and  the  presence  of  competition. 

For  these  reasons  I  regard  as  fundamental  and  of  the  greatest 
practical  importance  the  distinction  I  have  endeavored  to  draw. 

H.  T.  NEWCOMB. 

United  States  Census  Office. 

Before  beginning  an  examination  of  the  nature  and  results  of 
railway  combinations  it  is  desirable  to  consider  some  of  the  facts 
that  differentiate  combinations  in  transportation  from  combina- 
tions in  manufactures  and  trade. 

First  in  point  of  time :  A  strong  tendency  toward  the  combi- 
nation of  originally  separate  corporations  has  characterized  the 
railway  industry  during  its  entire  history;  in  manufactures  and 
in  trade  such  combinations  were  practically  unknown  prior  to 
1870. 

Again,  one  of  the  methods  of  railway  combination,  formerly 
most  effective — I  allude  to  the  practice  popularly  known  as  "pool- 
ing"— has  been  illegal,  so  far  as  interstate  traffic  is  concerned, 
since  1887,  and  even  agreements  to  maintain  reasonable  rates 
were  forbidden  by  the  anti-trust  law  of  1890  which  does  not 
appear  to  have  been  applied  successfully  to  any  other  industry. 

237 


The  years  subsequent  to  1887  have  witnessed  a  stronger  move- 
ment toward  the  consolidation  of  manufacturing  and  trading 
establishments  than  was  ever  previously  known. 

Further,  combinations  among  railways  can  directly  affect 
rates  on  but  a  portion  of  the  transportation  furnished  to  the  pub- 
lic, for  there  are  comparatively  few  points  served  by  more  than  a 
single  railway  and  a  large  portion  of  the  aggregate  traffic  must 
traverse  a  particular  route  or  it  cannot  be  moved ;  manufacturing 
and  trading  combinations,  if  they  affect  prices  at  all,  must  affect 
those  on  the  entire  output  of  the  establishments  combined. 

Eailway  combination  has  assumed  three  distinct  forms.  The 
first  involves  the  actual  merger  of  several  properties  through  cor- 
porate consolidation  or  practically  perpetual  leases.  Nearly 
every  great  railway  in  the  country  is  a  result  of  this  process.  The 
line  of  the  New  York  Central  from  Albany  to  Buffalo  is  formed 
of  ten  originally  separate  roads,  the  Atchison,  Topeka  and  Santa 
Fe  railroad,  which  terminates  in  this  city,  operates  lines  that 
were  formerly  the  property  of  more  than  one  hundred  distinct 
corporations.  Such  consolidations  have  been  welcomed  by  the 
wiser  section  of  the  public,  for  they  have  improved  the  service 
and  lessened  the  cost  and  difficulty  of  travel  and  of  moving 
freight. 

Another  form  of  combination. is  effected  by  the  purchase  of 
the  control  of  separate  corporations  in  a  common  interest.  Com- 
binations of  this  character  do  not  affect  the  corporate  organiza- 
tions which  remain  legally  separate,  and  they  may  be  brought 
about  without  publicity.  Until  recently  the  only  connection 
among  the  lines  composing  the  great  Vanderbilt  system  was  of 
this  character  and  at  present  most  of  the  lines  in  that  system  are 
held  in  this  manner.  The  svstem  controlled  by  the  bank- 
ing establishment  which  is  headed  by  Mr.  J.  Pierpont  Mor- 
gan has  no  other  connection  and  probably  very  few  individuals 
outside  of  the  firm  know  exactly  what  properties  compose  the 
system. 

The  third  form  of  combination  is  by  agreements  between  cor- 
porations which  remain  legally  separate  and  continue  to  exercise 
most  of  their  functions  independently.  Such  agreements  may 
provide  for  through  tickets,  the  forwarding  of  baggage,  through 
billing  of  freight,  interchange  of  cars,  and  many  other  incidents 
of  modern  methods  of  operation  that  are  essential  to  the  efficient 
organization  of  transportation.  Without  them  the  production  of 
utilities  of  place  would  be  much  more  difficult  and  costly  and 
territorial  division  of  labor,  which  permits  the  assignment  to 
each  locality  of  the  particular  industrial  function  to  which  it  is 

238 


best  adapted  by  natural  resources,  climate,  and  location,  could 
not  exist  in  its  present  state  of  development. 

Another  form  of  combination  by  agreements  among  otherwise 
independent  railway  corporations  has  probably  furnished  the 
occasion  for  more  debate  and  has  been  less  understood  by  the  gen- 
eral public  than  any  other  incident  of  railway  development — I 
refer  to  agreements  concerning  the  rates  to  be  charged  on  traffic 
for  which  two  or  more  routes  are  available. 

As  soon  as  the  railway  system  of  the  United  States  had 
reached  the  point  of  development  at  which  the  same  localities 
were  connected  by  rival  and  competing  lines,  some  peculiarities 
incidental  to  rate-making  began  to  attract  attention.  The  busi- 
ness of  railway  transportation  is  not  and  can  not  be  competitive, 
in  the  ordinary  sense,  at  more  than  a  few  points  and  with  regard  to 
but  a  small  portion  of  the  aggregate  traffic  Railways  cannot  be,  in 
many  instances  or  for  long  distances,  exactly  parallel.  At  points 
not  served  by  more  than  one  railway  or  possessing  facilities  for 
transportation  by  water  railway  business  is  from  its  nature  a 
monopoly.  The  business  of  such  points  can  often  be  made  to  pay 
the  entire  fixed  charges  and  a  large  proportion  of  the  operating 
expenses  and  the  railway  is  left  free  to  accept  traffic  at  the  com- 
peting points  at  rates  that  barely  pay  train-expenses.  In  the 
absence  of  express  or  tacit  agreements  concerning  such  charges 
this  result  was  found  to  occur  very  frequently.  It  involved  dis- 
criminations, apparently  unjust,  against  traffic  from  and  to  local 
points  which  artificially  accentuated  the  tendency  toward  the  con- 
centration of  population  and  industry  at  large  cities. 

But  the  case  was  even  worse  than  this.  Competition  in  this 
form  practically  placed  the  rate-making  power  in  the  hands  of  the 
most  reckless,  incapable,  or  unscrupulous  officials  connected  with 
any  line.  Such  an  official  could  force  rival  lines  to  meet  rates 
far  below  the  remunerative  point  or  to  witness  the  possibly  per- 
manent diversion  of  important  traffic  to  the  lines  of  their  com- 
petitors. He  could  bankrupt  his  own  road  or  that  of  his  rivals 
and  at  the  same  time  profit  greatly  by  the  manipulation  of  the 
securities  affected  in  the  stock  market.  The  competition  of  rival 
routes  seeking  to  secure  the  snme  traffic  therefore  produced  unjust 
discrimination  in  rates,  artificially  stimulated  the  tendency 
toward  concentration  of  population  in  cities,  and  was  an  effective 
and  dangerous  instrument  in  the  hands  of  railway-wreckers. 
Few  hnve  failed  to  recognize  these  facts,  but  many  have  supposed 
that  such  competition  has  resulted  in  lower  railway  charsres. 
An  argument  in  favor  of  this  contention  can  be  plausibly  sup- 
ported by  the  common  assumption,  that  too  frequently  passes 


undetected,  that  coincidence  of  time  and  place  prove  a  relation- 
ship as  between  cause  and  effect.  The  decline  in  railway  charges 
in  the  United  States  has  heen  continuous  and  extensive.  The 
average  rate  per  ton  of  freight  carried  one  mile,  measured  in  gold, 
has  declined  from  nearly  two  cents  in  1867  to  less  than  eight 
mills  in  1898,  the  last  year  covered  by  the  reports  of  the  statis- 
tician to  the  Interstate  Commerce  Commission.  The  price  of 
wheat  at  the  port  of  New  York  during  1867  would  pay  for  the 
transportation  of  but  2.84  bushels  of  wheat,  from  Chicago  to  New 
York  at  the  rates  of  that  year;  in  1897  the  price,  though  consid- 
erably lower  than  in  1867,  would  pay  for  moving  six  bushels.  In 
other  words,  the  decline  in  the  railway  rate  from  Chicago  to  New 
York  was  twice  as  great  as  the  decline  in  the  price  of  wheat. 
The  decline  in  passenger  rates  from  1871  to  1898  amounts 
apparently  to  25  per  cent;  but,  unlike  that  in  freight  rates,  is 
not  susceptible  of  satisfactory  statistical  presentation.  The  sub- 
stantial identity  of  the  service  necessary  to  permit  the  use  of  the 
statistical  method,  has  not,  however,  been  preserved.  The  dollar 
that  purchases  transportation  in  a  modern  train,  provided  with 
automatic  couplers  and  air  brakes,  traversing  at  sixty  miles  per 
hour,  a  track  composed  of  Bessemer  steel  rails  weighing  100 
pounds  to  the  yard,  and  guarded  by  block  signaling  apparatus, 
purchases  vastly  more  than  did  the  dollar  paid  for  personal 
transportation  a  few  decades  ago,  even  though  the  distance  trav- 
ersed be  but  little  greater  at  present.  The  public  has  preferred 
to  have  improved  accommodations  and  better  service  rather  than 
very  much  lower  charges  and,  as  usual  in  America,  has  had  its 
way.  The  same  rise  in  the  standard  of  living  that  has  given  the 
American  farmer  his  top-buggy,  his  piano  in  the  parlor,  his  Sun- 
day suit,  and  Brussels  carpet,  has  given  him  the  luxurious  coaches 
and  well-ballasted  roadbeds,  the  safety  and  the  speed  of  modern 
passenger  service. 

But  has  the  competition  of  rival  routes  produced  these  reduc- 
tions in  rates  and  improvements  in  the  quality  of  service?  I 
think  not. 

Such- competition  has  caused  numerous  extravagant  expcn-"- 
— it  has  made  railway  business  unnecessarily  costly,  and  some 
one  must  have  paid  the  bills.  Let  us  examine  some  of  these 
expenses,  though  it  is  not  easy  to  secure  authentic  statistic?,  and 
those  available  serve  to  suggest,  only,  the  possible  aggregates. 
The  Interstate  Commerce  Commission  has  reported  that  nine 
roads  paid  out  an  aggregate  sum  of  more  than  one  million  dollars 
in  a  single  year  as  eommi--ion=  for  securing  competitive  passenger 
business,  and  it  is  known  tlint  n=  much  as  $20.70  has  been  paid 


to  secure  a  single  second-class  passenger  from  this  city  to  San 
Francisco.  The  multitude  of  outside  agencies  and  traveling 
agents  maintained  solely  for  the  purpose  of  securing  business  for 
their  respective  lines  that  might  otherwise  traverse  those  of  their 
competitors  involves  an  expenditure  so  great,  even  during  periods 
of  comparative  harmony.,  that  it  has  been  deemed  necessary  to 
restrict  their  number  by  contract.  An  agreement  in  force  for  a 
considerable  time  limited  to  eight  the  number  of  agencies  that 
might  be  maintained  in  New  York  City  by  each  of  the  nine  roads 
competing  for  westward  bound  traffic  from  that  city.  As  it  is  a 
fact  of  ordinary  observation  that  such  agencies  always  cluster  in 
particular  regions  and  around  particular  corners,  it  is  obvious 
that  a  system  of  joint  agencies  would  afford  the  public  equal 
accommodation  at  lower  cost. 

During  the  periods  of  unbridled  competition,  popularly  known 
as  "rate  wars,"  each  participating  carrier  sends  its  freight  and 
passenger  agents  to  every  important  city  in  the  country  at  a  total 
expense  for  rents,  clerk  hire,  advertising,  etc.,  that  must  be 
enormous.  Four  roads  operating  westward  from  Chicago  are 
known  to  have  expended  $1,283,585  for  outside  agencies  and 
advertising  in  a  single  year,  during  which  rates  were  fairly  main- 
tained, while  during  an  equal  period  one  road  terminating  at  New 
York  City  expended  $871,291  for  similar  purposes. 

The  competition  of  long  circuitous  and  commercially  illegiti- 
mate routes  for  traffic  that  would  naturally  traverse  cheaper  and 
more  direct  lines  is  another  gross  extravagance  too  frequently 
observed.  The  president  of  an  important  line  has  said : 

"Illegitimate  business  is  always  the  pride  of  the  average 
traffic  manager.  To  secure  a  share  of  some  competitive  business 
not  naturally  or  fairly  belonging  to  a  carrying  line,  always  appears 
to  inspire  heroic  efforts  and  to  be  regarded  as  meriting  special 
commendation." 

Illustrations  are  numerous.  Between  Chicago  and  St.  Paul 
traffic  is  regularly  forwarded  over  a  route  practically  double  the 
length  of  the  shortest;  from  this  city  to  New  York  there  are 
twenty-one  routes  varying  from  912  to  1,376  miles  in  length; 
from  New  York  to  New  Orleans,  beside  many  water  carriers,  there 
are  more  than  ninety  all-rail  routes,  one  of  which  involves  carry- 
ing the  freight  nearly  to  this  city.  As  an  example  of  the  waste 
of  competitive  train  service,  it  is  not  necessary  to  add  to  the  bare 
statement  that  f ort}r-four  trains  leave  this  city  every  day  for  New 
York  and  that  practically  similar  duplication  of  service  exists 
wherever  the  same  cities  are  connected  by  competing  railways. 

The    construction    of   unnecessary   lines   is    another   gross 

241 


extravagance  involving  an  expenditure  from  the  store  of  energy 
available  for  the  satisfaction  of  human  wants  that  produces  no 
good  result.  The  West  Shore,  the  Nickel-Plate,  and  many  other 
wholly  superfluous  routes  will  occur  readily  to  any  one  as  illus- 
trations. 

If  competition,  while  involving  these  wastes,  has  still  reduced 
railway  charges,  these  extravagant  expenditures  must  have  been 
met  by  investors  in  railway  property.  If  this  were  the  case 
would  it  have  been  possible  to  secure  the  capital  necessary  for  the 
rapid  development  of  the  American  railway  system,  for  the  new 
construction  that  has  gone  on  during  the  years  subsequent  to 
1870? 

But  the  arguments  are  by  no  means  all  of  a  negative  character. 
The  decline  in  rates  has  affected  those  from  and  to  points  served 
by  single  carriers  as  well  as  those  served  by  one  or  more.  There 
is  no  important  point  and  no  article  of  traffic  that  moves  in  con- 
siderable volume  that  has  not  felt  the  effects  of  reduced  charges. 

A  little  thought  will  suggest  a  cause  that  may  have  produced 
the  decline,  in  spite  of,  though  somewhat  hindered  by,  the  wastes 
just  discussed. 

For  lack  of  a  better  phrase  this  cause  may  be  designated  as 
the  competition  among  producers  for  the  privilege  of  selling  in 
the  dearest  markets  and  that  of  consumers  for  the  privilege  of 
purchasing  in  the  cheapest  markets.  This  needs  to  be  qualified 
by  the  suggestion  that  railways  must  be  considered  as  producers 
for  the  reason  that  the  productive  process  cannot  be  regarded  as 
complete,  in  connection  with  a  particular  article,  until  that  article 
is  available  for  consumption.  In  more  technical  words,  that  are 
however  perfectly  clear  in  their  meaning,  production  consists  of 
the  creation  of  utilities  of  place  as  well  as  of  utilities  of  form. 

Railways,  therefore,  are  partners  in  the  production  of  the 
commodities  that  they  carry.  Partners  with  whom?  The  answer 
is  with  every  separate  productive  establishment,  farm,  or  factory, 
workshop  or  mine  that  exists  along  their  lines  and  furnishes 
traffic  for  their  trains.  Each  railway  forms  in  effect  a  separate 
combination  (the  word  combination  is  here  used  in  a  clearly 
innocuous  sense)  with  each  separate  productive  establishment 
and,  as  either  place  or  form  utilities  might  be  useless  without  the 
other,  these  combinations  are  essential  to  the  completion  of  the 
productive  process.  Obviously,  any  railway  may  participate  in 
many  such  combinations  which  produce  the  same  article.  These 
combinations  may  compete  among  themselves  and  as  most  pro- 
ducers of  form  utilities  have  a  definite  cost  of  production  per  unit 
of  product  while  most  of  the  costs  of  producing  transportation 

242 


cannot  be  assigned  to  particular  services  it  is  not  difficult  to 
force  railways  to  assume  the  greater  shares  in  the  sacrifices  which 
such  competition  involves.  There  is  no  other  possible  explana- 
tion of  the  decline  in  rates  that  will  account  for  the  fact  that 
while  railway  mileage  is  now  three  times  as  great  as  in  1871  the 
aggregate  amount  of  dividends  paid  on  railway  stock  has  been 
lower  during  every  year  of  the  present  decade  than  it  was  in  that 
year. 

The  student  who  will  carefully  and  impartially  investigate  the 
circumstances  attending  the  decline  in  railway  charges,  its  rela- 
tion to  prices  and  cost  of  production,  its  effect  on  the  competi- 
tion among  the  producers  of  form  utilities,  and  its  consequences 
as  expressed  in  rates  of  interest  and  dividends,  will  find  convinc- 
ing evidence  that  competition  of  railways  as  partners  in  the  busi- 
ness of  production  is  always  powerful  enough  to  force  railway 
rates  to  the  lowest  point  at  which  the  revenue  derived  from  them 
will  pay  operating  expenses,  under  whatever  methods  of  opera- 
tion are  for  the  time  being  in  force,  and  afford  the  lowest  return 
to  the  capital  invested  which  in  a  developing  country  will  induce 
capitalists  to  provide  the  additional  facilities  from  time  to  time 
required  and  to  maintain  those  existing  in  a  state  of  satisfactory 
efficiency. 

The  foregoing  analysis  shows  that  the  substitution  of  effective 
agreements  in  regard  to  rates  for  the  competition  of  rival  routes 
prevents  unjust  discriminations  in  charges,  and  permits  econo- 
mies in  operation  which  inevitably  accrue  in  the  form  of  reduced 
rates  to  the  benefit  of  shippers  and  travelers. 

I  say  "effective  agreements"  for  experience  has  shown  that 
such  arrangements  are  frequently  of  little  use.  How  can  such 
agreements  be  made  effective?  The  history  of  American  railway 
practice  affords  a  ready  answer.  To  give  effectiveness  to  such 
arrangements  has  been  the  aim  of  nearly  every  practical  railway 
manager  since,  at  least,  the  year  1870,  but  no  scheme  ever  devised 
has  been  even  moderately  successful  unless  it  has  provided  for  the 
distribution  of  traffic  between  points  connected  by  two  or  more 
routes  in  shares  fixed  in  the  agreement  or  determined  in  accord- 
ance with  its  terms.  Popular  will  has  attached  to  such  arrange- 
ments the  name  "pool,"  and  though  it  is  in  many  respects  inac- 
curate and  misleading,  not  much  can  be  gained  by  quarreling 
with  an  accepted  designation.  "We  shall  not  be  terrified  by  the 
name  for  we  have  discovered  that  the  thins1  to  which  it  refers  is 
nothing  more  than  a  device  for  griving  effect  to  agreements  which 
are  in  themselves  wise  and  beneficial,  which  tend  to  secure  justice 

243 


in  the  distribution  of  the  cost  of  transportation  and  also  to  reduce 
its  aggregate. 

Those  who  are  only  superficially  acquainted  with  the  history 
of  railway  administration  in  the  United  States  will  inquire  how 
it  happened  that  so  beneficent  a  practice  was  prohibited  by  con- 
gressional enactment.  The  interstate  commerce  law  was  intended 
to  prevent  unjust  discrimination  in  railway  charges,  yet  it  was 
weighted  down  and  some  of  its  most  salutary  features  rendered 
nugatory  by  the  anti-pooling  clause  which  is  in  irreconcible  con- 
flict with  every  other  substantial  provision  that  it  contains.  The 
"power  to  compete"  in  the  words  of  the  statesmanlike  chairman  of 
the  Interstate  Commerce  Commission,  who  is  an  honored  member 
of  this  conference,  "is  the  power  to  discriminate."  Why,  then, 
did  Congress  attempt  to  perpetuate  competition  while  endeavor- 
ing to  prevent  its  natural  results?  One  might  answer,  not  incor- 
rectly, that  this  action  was  in  obedience  to  a  "Texas  idea"  not 
unlike  that  which  refuses  here  to  consider  the  nature  and  conse- 
quence of  industrial  combinations  while  vehemently  demanding 
their  statutory  condemnation  and  prohibition,  for  the  anti-pool- 
ing clause  was  actually  forced  into  the  interstate  commerce  law 
by  a  faction  led  by  a  member  of  the  House  of  Eepresentatives 
from  the  state  of  Texas  and  against  the  judgment  of  the  most 
enlightened  members  of  both  houses  of  Congress ;  the  alternative 
presented  being  the  defeat  of  the  measure  under  consideration 
and  the  indefinite  postponement  of  all  regulative  legislation. 

When  the  committee  on  Interstate  Commerce  of  the  United 
States  Senate  conducted  the  exhaustive  investigation  which  pre- 
ceded the  passage  of  the  act  to  regulate  commerce,  pooling  had 
been  an  important  feature  of  American  railway  practice  for  at 
least  fifteen  years.  Yet  objections  to  the  system  are  infrequently 
found  among  the  large  number  of  opinions  gathered  in  the  public 
hearings  and  explicit  expressions  of  approval  are  numerous. 
Students  of  transportation  and  public  officers  charged  with  the 
duty  of  studying  railway  methods  had  previously  declared  in 
favor  of  agreements  for  the  division  of  traffic.  A  member  of  this 
conference,  Dr.  Joseph  Nimmo,  Jr.,  who  was  for  many  years  at 
the  head  of  the  Bureau  of  Statistics  of  the  United  States  Treas- 
ury Department,  declared  in  the  course  of  an  official  report  pub- 
lished in  1879  that  railway  pooling  was  then  favored  by  the  gen- 
eral public  because  it  had  proved  to  be  the  means  of  "arresting 
discriminations"  and  the  Iowa  Eailroad  Commission  in  its  report 
for  1878  expressed  the  same  opinion  by  declaring  that  it  consid- 
ered "the  pool  as  the  only  agency  that  can  compel  the  through 

244 


traffic  to  bear,  as  it  should,  its  proportion  of  the  interest  on  the 
cost  and  expenses  of  maintaining  and  operating  the  roads." 

Whatever  public  condemnation  the  pooling  system  received 
aside  from  that  inspired  by  the  irresponsible  utterances  of  dema- 
gogues, who  found  attacks  upon  railway  corporations,  just  as 
their  prototypes  a  few  decades  earlier  had  found  the  enthusiasm 
for  railway  construction,  an  easy  and  convenient  means  of  attain- 
ing office,  was  due  to  the  fact  that  those  arrangements  were  never 
permanent  and  in  consequence  never  wholly  eradicated  the  evils 
they  were  intended  to  correct. 

Indeed  at  almost  the  same  time  that  the  officials  referred  to 
gave  their  approval  of  the  pooling  system,  Mr.  Albert  Fink,  the 
originator,  organizer,  and  official  head  of  the  most  complete  pool- 
ing association  ever  established,  was  complaining  of  their  lack  of 
permanence  and  stability  and  urging  the  necessity  of  legislation 
that  would  give  them  legal  sanction  and  effect. 

In  fact  all  railway  pools  in  the  United  States  were  extra-legal 
arrangements  dependent  for  their  execution  upon  the  good  faith 
of  the  parties,  upon  the  violation  of  which  none  of  them  would 
venture  to  appeal  to  the  courts  for  redress.  So  lacking  were 
these  arrangements  in  the  necessary  cohesive  qualities  that  each 
railway  considered  their  abrogation  an  inevitable  incident,  pend- 
ing which  constant  vigilance  was  necessary  in  order  that  the  day 
of  dissolution  should  not  find  it  an  unready  or  tardy  contestant  in 
the  struggle  for  traffic.  The  period  during  which  a  pooling  con- 
tract was  in  force  was  consequently  one  of  armed  neutrality,  and, 
as  in  many  cases  between  nations,  that  relation  was  regularly  dis- 
turbed by  the  depredations  of  irresponsible  members  of  the  rival 
forces.  As  the  apportionment  of  business  in  any  pool  which 
should  follow  a  period  of  warfare  would  probably  be  based  upon 
the  proportion  offered  (if  a  tonnage  pool)  or  carried  (if  a  money 
pool)  prior  to  the  disruption  of  such  an  agreement,  there  was  a 
strong  incentive  to  take  advantage  of  every  opportunity  to  gain 
traffic  by  its  violation  which  promised  immunity  from  detection. 

Thus  there  was  never  an  entire  abandonment  of  the  baneful 
practices  of  competition,  there  were  always  discriminations  in 
favor  of  competitive  traffic,  and  there  were  frequent  periods  dur- 
ing which  all  the  evils  of  unjust  discrimination  operated  to  their 
fullest  extent.  Nevertheless,  as  indicated  in  the  quotation  from 
the  Iowa  Eailroad  Commission,  the  evils  of  excessive  competition 
were  in  some  degree  mitigated  and  the  pooling  arrangements, 
unstable  and  unsatisfactory  as  they  too  frequently  were,  indi- 
cated a  means  of  securing,  in  a  large  measure,  that  substantial 

245 


identity  among  the  interests  of  the  carrying  corporations  which 
is  a  prerequisite  to  the  lowest  and  most  equitably  adjusted  rates.  - 

When  the  interstate  commerce  law  became  effective  all  pool- 
ing contracts  were  discontinued  and  there  is  evidence  that  the 
railways  generally  sought  in  good  faith  to  observe  its  provisions. 

Eailway  associations  were  formed  which  announced  as  their 
objects  the  maintenance  of  reasonable  rates  and  the  enforcement 
of  the  regulative  provisions  of  the  law.  -The  co-operation  of  the 
weaker  lines  was  in  many  instances  purchased  by  permission  to 
charge  slightly  lower  rates  than  those  collected  by  their  stronger 
rivals.  Subsequently  other  efforts  were  made  to  effect  the  satis- 
factory division  of  traffic  without  its  actual  transfer  from  one  line 
to  the  other  after  consignment  and  without  resorting  to  the 
methods  technically  characteristic  of  tonnage  pools.  The  prac- 
tical failure  of  these  measures  is  generally  recognized,  and  most 
railway  patrons  now  agree  with  railway  owners  and  managers  in 
urging  a  modification  of  the  interstate  commerce  law  that  will 
permit  agreements  for  the  apportionment  of  traffic;  operations 
thereunder  to  be  conducted  under  the  supervision  of  federal 
authorities. 

This  change  has  been  recommended  by  several  annual  conven- 
tions of  national  and  state  railway  commissioners,  by  the  National 
Board  of  Trade,  by  a  conference  of  representatives  of  boards  of 
trade  and  other  commercial  organizations  of  the  principal  cities  of 
this  country;  it  has  been  approved  by  members  of  the  Interstate 
Commerce  Commission  and  by  the  author  of  the  anti-pooling  sec- 
tion of  the  present  law.  A  bill  embodying  it  and  including  also 
several  very  desirable  amendments  to  the  interstate  commerce  law 
which  had  been  strongly  urged  by  the  Commission  passed  the 
House  of  Kepresentatives  during  the  last  session  of  the  Fifty- 
third  Congress,  and  would  unquestionably  have,  received  the  sup- 
port of  a  large  majority  of  the  Senate  had  not  the  rules  of  that 
body  and  the  early  approach  of  the  end  of  the  session,  combined 
with  the  obstructive  tactics  of  a  numerically  insignificant  minor- 
ity, made  it  impossible  to  secure  a  vote  upon  its  passage. 

It  should  be  observed  that  whatever  pooling  measure  may 
finally  be  adopted  by  Congress,  operations  under  it  will  certainly 
be  free  from  objections  such  as  those  growing  out  of  the  instabil- 
ity which  characterized  pooling  arrangements  prior  to  1887. 
The  contracts  permitted  will  have  the  express  sanction  of  a 
federal  statute  and  any  railway  corporation  that  may  be  injured  by 
the  failure  of  another  to  observe  the  terms  of  a  pooling  agreement 
to  which  both  are  parties  may  invoke  judicial  aid  in  securing 
the  particular  redress  that  is  found  to  be  adequate  and  suitable. 

246 


Such  agreements  will  naturally  provide  for  a  definite  period  of 
operation,  with  possibly  continuance  thereafter  subject  to  notice 
of  the  intention  of  any  party  to  withdraw.  The  possibility  of 
unjust  personal  discriminations  will,  it  may  reasonably  be  hoped, 
be  minimized  by  the  discontinuance  of  separate  soliciting  for 
traffic,  and  the  substitution  of  joint  for  independent  ticket  and 
freight  agencies. 

Mr.  President,  I  believe  it  only  reasonable  to  assert  that  the 
facts  to  which  I  have  directed  your  attention  establish  the  exist- 
ence of  a  natural  tendency  toward  combination  in  the  railway 
industry,  that  tbey  demonstrate  the  futility  and  the  fatuity  of 
legislation  intended  to  prevent  such  combinations,  and  establish 
beyond  controversy  the  advisability  of  restoring  the  pooling  privi- 
lege with  federal  supervision  and  legal  effect  and  sanction  added. 
It  would  be  almost  superfluous  to  introduce  evidence,  as  would 
be  easily  practicable,  that  the  prohibition  cf  pooling — such  pro- 
hibition being  itself  a  restriction  upon  freedom  of  contract — arti- 
ficially stimulates  the  tendency  toward  other  forms  of  combina- 
tion. All  are  familiar  with  the  facts  which  amply  prove  this  to 
have  been  the  case  since  1887. 

It  remains  to  consider  the  relation  between  railway  combina- 
tions and  combinations  in  other  lines  of  industry.  Nearly  every 
one  who  has  addressed  this  conference  has  alluded  to  discrimina- 
tions in  railway  rates  as  one  of  the  causes  of  industrial  combina- 
tions and  perhaps  the  most  important  public  contribution  made 
by  this  body  will,  when  in  the  lapse  of  time  its  results  can  ade- 
quately be  summarized,  be  found  to  be  the  classification  of  com- 
binations with  regard  to  whether  they  are  the  result  of  superior 
efficiency  in  production,  whether  of  machinery  or  organization; 
or  of  special  privileges  at  the  hands  of  government  or  the  agents 
of  government. 

Whatever  may  be  held  as  to  the  consequences  of  the  first  class 
there  can  be  no  doubt  that  those  combinations  that  are  dependent 
upon  special  favors  of  any  kind  are  harmful  in  the  extreme. 

Eailway  corporations  are  agents  of  government  in  the  sense 
that  they  are  empowere.d  thereby  to  exercise  functions  usually  and 
properly  regarded  as  governmental.  If  these  agencies  unjustly 
discriminate  among  their  patrons  those  receiving  unfair  advan- 
tage may  be  able  to  dominate  markets  and  destroy  competition. 
In  the  words  of  the  present  chairman  of  the  Interstate  Commerce 
Commission,  whose  clear  and  vigorous  English  is  always  quotable : 

"The  ultimate  effect  of  preferential  rates  is  to  concentrate 
the  commerce  of  the  country  in  a  few  hands.  The  favored 
shipper,  who  is  usually  the  large  shipper,  is  furnished  with  a 

247 


weapon  against  which  skill,  energy  and  experience  are  alike 
unavailing.  When  the  natural  advantages  of  capital  are  aug- 
mented by  exemptions  from  charges  commonly  imposed  it  be- 
comes powerful  enough  to  force  all  rivals  from  the  field." 

We  have  found,  therefore,  in  unjustly  discriminating  rates  a 
primary  cause  of  a  dangerous  and  harmful  industrial  growth. 
Wise  statecraft  will  seek  to  remove  the  cause.  But  how?  Can 
this  be  accomplished  by  making  it  a  felony  to  grant  special  rates 
as  suggested  by  the  great  orator  from  New  York  (Hon.  Bourke 
Cochran)  who  has  preceded  me  in  indicating  this  cause  of  indus- 
trial combination?  Apparently  not,  for  it  is  now  nearly  a  decade 
since  the  interstate  commerce  law  was  so  amended  as  to  provide 
the  penalty  of  imprisonment,  not  only  for  the  railway  official  who 
makes,  but  for  the  shipper  who  accepts  any  concession  from  the 
open  published  rates.  Nothing  could  be  more  drastic,  yet  dis- 
criminations so  accomplished  have  been  a  conspicuous  feature  of 
the  railway  situation  during  nearly  the  entire  subsequent  period, 
the  existence  of  the  evil  has  attained  public  notoriety  and  its  mag- 
nitude has  alarmed  and  amazed  the  nation,  yet  no  prison  door  has 
ever  opened  to  receive  an  individual  convicted  of  violating  the 
statute. 

These  practices  are  not  contrary  to  the  ethics  of  modern  busi- 
ness ;  selling  or  buying  at  lower  than  the  usual  prices,  or  giving 
or  accepting  special  rates  are  not  recognized  evidences  of  deprav- 
ity, the  methods  of  making  concessions  are  easily  hidden,  and 
those  interested  in  their  detection  are,  as  compared  with  their 
beneficiaries,  too  frequently  inexperienced  and  powerless. 

A  little  while  ago  I  endeavored  to  show  that  discrimination  is 
the  natural  result  of  competition  among  railways  seeking  the 
same  traffic.  These  concessions  are  not  voluntarily  granted  by 
railway  officials,  but  are  wrung  from  them  through  fear  of  losing 
important  traffic;  they  are  grudgingly  and  reluctantly  given  to 
those  who  control  traffic  that  is  vitally  important.  To  quote 
Chairman  Knapp  once  more : 

"  *  *  *  it  is  simply  out  of  the  question  to  have  at  once 
the  absence  of  discrimination  and  the  presence  of  competition." 
And: 

«.;*.**  the  choice  lies  between  competition  on  the  one 
hand,  with  the  inevitable  outcome  of  discriminations  which  favor 
the  few  at  the  expense  of  the  many,  or  like  charges  for  like  ser- 
vice, which  can  be  realized  only  by  permitting  and  encouraging 
co-operative  action  by  rival  railroads." 

Mr.  President,  I  can  add  nothing  to  this  extract  from  one  who 
has  been  for  years  charged  with  the  duty  of  attempting  to  enforce 

248 


a  statute  that  in  its  present  shape  is  unenforceable.  To  prevent 
railway  discrimination,  to  destroy  many  of  that  evil  class  of  com- 
binations which  is  based  upon  illegitimate  advantages,  it  is  neces- 
sary to  restore  to  railway  corporations  under  federal  supervision, 
the  power  to  divide  competitive  business.  Then  the  possibility 
of  unjust  personal  discrimination  will,  it  may  reasonably  be 
hoped,  be  minimized  by  the  discontinuance  of  separate  soliciting 
for  traffic,  and  the  substitution  of  joint  for  independent  ticket 
agencies.  The  temporarily  divergent  interests  of  separate  bodies 
of  stock  and  bondholders  will  be  subordinated  to  the  general 
interest  of  all  the  carriers  in  the  satisfactory  adjustment  of  the 
railway  system  to  the  ends  for  which  it  exists,  and  the  latter  will 
constitute  a  powerful  agency  for  the  elimination  of  unjust  dis- 
criminations including  those  among  competing  localities  and 
communities.  Whenever  the  exact  proportion  of  competitive 
traffic  which  will  fall  to  each  particular  route  is  as  certain  as  that  it 
will  receive  all  of  the  non-competitive  traffic,  both  will  be  treated 
with  equity,  for  there  will  be  no  reason  for  favoring  localities 
served  by  more  than  one  railway.  The  selfish  interests  of  carriers 
will  then  make  powerfully  for  justice,  while  such  regulative 
instrumentalities  as  may  be  established  by  the  public,  will  have 
the  advantage  of  dealing  with  a  railway  system  that  has  become 
practically  unified.  Until  then  the  existence  of  unjust  discrimi- 
nations must  not  be  charged  against  railway  corporations  or 
railway  officials,  but  against  the  public  agencies,  legislative  or 
otherwise,  which  have  insisted  upon  the  continuance  of  the  un- 
economic, wasteful  and  socially  detrimental  form  of  railway 
competition. 

PAUL  MOKTON. 

fThird  Vice-President  A.,  T.  &  S.  F.  R.  R. 

Industrial  combinations  or  trusts  are  very  similar  to  other 
commercial  enterprises.  Some  will  fail,  others  will  succeed. 
Success  or  failure  depends,  first,  on  whether  they  are  constructed 
on  a  good  foundation,  or  whether  they  are  built  upon  sand  and 
inflated  with  wind  and  water.  Second,  whether  they  are  intelli- 
gently managed  or  not. 

In  most  instances,  the  efficient  men  are  being  retained  by  the 
trusts  which  have  been  recently  formed.  This  augurs  well. 
Upon  intelligent  management  depends  the  question  of  prices 
which  should  be  quite  reasonable  at  all  times.  No  citizen  denies 
the  right  of  the  manufacturer  or  producer  to  make  a  reasonable 
profit,  and  it  is  manifestly  best  for  the  welfare  of  the  community 


at  large  that  the  nation's  commerce  should  make  a  fair  return  to 
those  engaged  in  it,  for  capital,  time,  brains  and  labor  employed. 

I  am  one  of  those  who  believe  that  the  United  States  possesses 
great  advantages  over  most  other  countries  of  the  world.  We 
raise  our  own  food  products,  and  yet  have  much  to  spare  for  ex- 
port. There  is  no  such  fertility  of  soil  under  cultivation  in  the 
universe  as  that  found  from  the  Atlantic  coast  extending  west  to 
the  Eocky  Mountains. 

In  addition  to  the  cheap  food  supply,  there  are  districts  here 
and  there  immensely  rich  in  coal,  timber,  oil,  natural  gas,  iron 
and  other  metals.  In  the  Rocky  Mountains  themselves,  which 
have  as  yet  been  barely  scratched,  are  gold,  silver,  lead  and  cop- 
per. "West  of  the  Rocky  Mountains  is  California  with  its  wonder- 
ful climate  and  soil  that  is  capable  of  producing  anything  that 
Italy  does.  One  is  not  startled  at  the  wonderful  production  of 
this  Pacific  coast  state  until  it  is  learned  that  in  one  season  Cali- 
fornia has  shipped  15,000  car  loads  of  oranges,  over  10,000  cars 
of  deciduous  fruits,  5,000  cars  of  raisins,  and  6,000  cars  of  prunes. 

For  a  long  time  we  have  been  the  granary  of  the  globe,  and 
we  are  now  ambitious  to  become  the  factory  of  the  world.  The 
raw  material,  the  inventive  genius  and  the  business  ability  are 
here  and  it  seems  to  me  that  with  these  colossal  industrial  institu- 
tions the  opportunity  for  trade  expansion  is  to  be  grasped. 
Through  the  agency  of  these  much  condemned  combinations,  I 
believe  the  control  of  the  markets  of  the  world  will  be  much  more 
easily  and  quickly  secured,  and  by  their  operations  we  will  make 
such  rapid  strides  in  the  next  twenty  years  that  we  will  all  look 
back  and  wonder  why  the  wisdom  of  their  incubation  was  ever 
questioned. 

The  new  trusts  are  largely  organized  with  ample  working 
capital,  and  can  afford  to  employ  the  best  salesmen  to  explore  and 
capture  the  far-away  markets.  Small  firms  or  industries  cannot 
do  this.  It  requires  a  great  deal  of  money  to  work  up  a  foreign 
trade.  One  of  the  chief  reasons  why  the  merchants  of  Mexico 
and  South  America  do  not  trade  here,  is  because  they  are  given 
twelve  months'  credit  or  longer  by  French,  German  and  English 
traders.  It  will  be  an  easy  matter  for  our  new  industrial  institu- 
tions to  meet  this  kind  of  competition,  but  private  industries  and 
corporations  could  not  do  so. 

Some  of  us  that  are  very  much  in  touch  with  the  railroads  are 
very  earnest  in  the  belief  that  the  railroad  service  of  the  country- 
could  be  very  much  improved  and  cheapened,  provided  the  trans- 
portation lines  of  the  country  were  permitted  by  law  to  contract 
with  each  other  for  a  division  of  business. 


250 


It  is  without  doubt  the  aim  and  intention  of  all  those  in  favor 
of  or  opposed  to  railroad  pooling  that  there  should  be  no  preferen- 
tial rates  in  favor  of  large  shippers  as  against  small  ones;  that 
there  should  be  no  discrimination  in  transportation  charges  as 
between  individuals  or  communities  and  that,  generally  speaking, 
there  should  be  stability  in  freight  rates. 

I  contend  that  the  present  interstate  commerce  law,  which 
without  doubt  was  conceived  with  the  idea  of  no  discriminations 
of  any  character  to  any  one,  prevents  by  its  anti-pooling  clause, 
precisely  what  it  seeks  to  attain. 

The  transportation  of  the  country  is  a  public  service  and  a 
tax  upon  its  inhabitants.  None  escapes  from  it.  It  is  with  many 
indirect  and  invisible,  but  even  to  a  greater  extent  than  a  protec- 
tive tariff,  it  is  always  with  us.  This  tax  should  be  levied  with 
the  greatest  care,  and  should  neither  favor  the  largest  shipper  nor 
the  greatest  city.  The  small  shipper  and  infant  industry  and  the 
village  should  have  every  reasonable  opportunity  to  grow.  Even 
though  it  be  of  great  consequence  in  the  operation  of  a  railroad 
whether  it  handles  one  thousand  car  loads  of  freight  for  one  man, 
or  for  one  hundred  men,  it  is  the  inherent  right  of  the  small 
shipper  and  the  small  village  that  they  should  be  treated  with 
justice.  Certainly  the  railroads  can  better  serve  one  hundred 
customers  shipping  ten  cars  each  at  tariff  rates,  than  to  serve  the 
one  thousand  car  man  at  a  cut  rate.  There  should  be  no  injustice 
or  unreasonable  discrimination  in  rates. 

Distribution  is  the  handmaid  of  production,  and  the  greatest 
prosperity  will  come  from  the  most  perfect  stability  in  transporta- 
tion charges.  Eates  should  be  so  fairly  adjusted  as  between 
shippers  and  between  localities  as  to  work  no  injustice.  They 
ought  to  be  so  adjusted  that  tire  small  shipper  in  the  small  town 
will  have  the  same  relative  right  and  opportunity  that  the  big 
shipper  in  a  metropolitan  city  possesses.  I  believe  the  price  of 
railroad  charges  should  be  as  unfluctuating  as  the  price  of  postage 
stamps.  How  would  a  Chicago  or  a  Kansas  City  merchant  feel  if 
his  New  York  competitors  were  buying  postage  stamps  at  a  lower 
price  than  he?  How  would  interior  merchants  take  it  if  it  was 
generally  understood  that  business  houses  in  cities  located  on  the 
sea  coast  were  obtaining  lower  import  duties?  Would  they  not 
be  indignant  and  resent  such  a  condition  with  all  the  vigor  and 
energy  that  they  could  muster,  and  yet  the  price  of  postage  stamps 
and  the  import  duties  of  the  country  cut  a  very  small  figure  in 
the  commerce  of  our  country,  when  compared  with  its  transporta- 
tion. 

I  believe  that  railroads  should  be  authorized  by  law  to  com- 

251 


bine  tinder  proper  supervision  of  the  Interstate  Commerce  Com- 
mission, and  I  think  that  this  is  more  desirable  and  will  bring 
more  prosperity  and  satisfaction  to  the  country  at  large  than 
unrestricted  competition.  Unrestricted  competition  is  sure  to 
lower  wages  and  beget  inferior  service. 

One-fifth  of  the  wealth  in  the  United  States  is  invested  in 
railroad  properties.  The  transportation  lines  are  the  greatest 
purchasing  power  in  existence.  When  they  are  doing  well  and 
freely  buying  goods  at  fair  prices,  the  country  is  prosperous 
Destroy  that  purchasing  power  by  unrestricted  competition  and 
you  at  the  same  time  strike  a  blow  to  the  industry  of  the  country 
that  will  stagger  it. 

There  have  already  been  great  consolidations  of  railroad 
properties  in  this  country.  What  has  been  the  effect?  Are  wages 
any  lower,  or  rates  of  freight  any  higher?  Is  not  the  service 
rendered  the  highest  type  produced  in  the  world?  Statistics  will 
show  that  the  large  roads  of  the  country  pay  higher  wages  than 
the  small  ones  do,  and  they  generally  receive  less  pay  for  the 
services  rendered  than  the  small  ones  do. 

Eates  of  transportation  in  the  United  States  are  much  lower 
than  anywhere  else  in  the  world.  The  fact  is  playing  no  small 
part  in  the  position  that  this  country  is  now  assuming  in  the  com- 
merce of  the  world.  The  true  interest  of  the  United  States  is  in 
properly  protecting  its  transportation  lines,  and  one  of  the  things 
that  should  be  done  in  this  direction  is  to  enact  a  law  legalizing 
pooling.  Much  has  been  said  about  the  trusts  keeping  down  the 
young  man  without  capital,  it  being  claimed  that  under  these 
colossal  industrial  combinations,  the  poor  young  man  will  have 
no  opportunity  to  advance.  I  take  the  other  view  of  the  case. 
The  more  colossal  the  combination,  the  more  requirement  there 
is  for  brains  and  the  higher  the  compensation  that  is  offered  for 
it.  Big  railroads  and  large  combinations  of  industry  are  always 
on  the  lookout  for  good  men.  It  is  often  claimed  that  eighty  men 
out  of  every  hundred  that  go  into  business  for  themselves  make 
failures  of  it.  If  this  is  true,  will  not  the  twenty  men  who  have 
succeeded  heretofore  be  in  much  greater  demand  as  executive 
officers  of  these  large  institutions  and  at  greater  remuneration 
than  heretofore?  Will  not  the  other  eighty  be  happier  in  finding 
employment  at  good  wages  where  they  do  not  have  to  risk  their 
capital?  I  do  not  think  that  any  radical  regulation  of  trusts  is 
necessary.  I  believe  that  when  securities  are  offered  for  sale  to 
the  public,  too  much  publicity  cannot  be  given  by  the  officers  of 
the  company  selling  the  securities,  although  people  who  buy  in- 

252 


dustrial  or  other  stocks  without  careful  investigation  before  pur- 
chasing, are  not  entitled  to  much  sympathy. 

I  believe  that  trusts  will  regulate  themselves.  Any  attempt 
to  keep  prices  higher  than  they  ought  to  be  is  a  direct  bid  for 
competition.,  and  capital  always  stands  ready  for  new  industries 
to  manufacture  products  which  can  be  sold  at  abnormally  high 
prices.  Many  of  those  who  have  tried  it,  say  they  like  nothing 
better  than  to  compete  with  a  combination  that  is  trying  to  get 
unreasonable  profits. 

Permit  the  railroads  to  pool  their  earnings  under  the  super- 
vision of  the  Interstate  Commerce  Commission,  or  some  other 
similar  body,  and  you  will  take  a  long  step  toward  doing  away 
with  preferential  rates  in  favor  of  a  select  few,  and  this  is  the 
one  reform  that  all  the  speakers  at  this  trust  conference  are  em- 
phatically united  in  saying  is  an  evil  that  should  at  once  be 
stopped. 

BENJAMIN  E.  TUCKER. 

Editor  New  York  Liberty. 

A  warm  reception  was  extended  to  Benjamin  R.  Tucker  of 
New  York,  who,  speaking  on  "The  Attitude  of  Anarchism  To- 
ward Industrial  Combinations,"  said: 

Having  to  deal  very  briefly  with  the  problem  with  which  the 
so-called  trusts  confront  us,  I  go  at  once  to  the  heart  of  the 
subject,  taking  my  stand  on  these  propositions :  That  the  right 
to  co-operate  is  as  unquestionable  as  the  right  to  compete;  that 
the  right  to  compete  involves  the  right  to  refrain  from  competi- 
tion ;  that  co-operation  is  often  a  method  of  competition,  and  that 
competition  is  always,  in  the  larger  view,  a  method  of  co-opera- 
tion; that  each  is  a  legitimate,  orderly,  non-invasive  exercise  of 
the  individual  will  under  the  social  law  of  equal  liberty;  and  that 
any  man  or  institution  attempting  to  prohibit  or  restrict  either, 
by  legislative  enactment  or  by  any  form  of  invasive  force,  is, 
in  so  far  as  such  man  or  institution  may  fairly  be  judged  by  such 
attempt,  an  enemy  of  liberty,  an  enemy  of  progress,  an  enemy  of 
society,  and  an  enemy  of  the  human  race. 

Viewed  in  the  light  of  these  irrefutable  propositions,  the  trust, 
then,  like  every  other  industrial  combination  endeavoring  to  do 
collectively  nothing  but  what  each  member  of  the  combination 
rightfully  may  endeavor  to  do  individually,  is,  per  se,  an  unim- 
peachable institution.  To  assail  or  control  or  deny  this  form  of 

253 


co-operation  on  the  ground  that  it  is  itself  a  denial  of  competi- 
tion is  an  absurdity.  It  is  an  absurdity,  because  it  proves  too 
much.  The  trust  is  a  denial  of  competition  in  no  other  sense  than 
that  in  which  competition  itself  is  a  denial  of  competition.  The 
trust  denies  competition  only  by  producing  and  selling -more 
cheaply  than  those  outside  of  the  trust  can  produce  and  sell;  but 
in  that  sense  every  successful  individual  competitor  also  denies 
competition.  And  if  the  trust  is  to  be  suppressed  for  such  denial 
of  competition,  then  the  very  competition  in  the  name  of  which 
the  trust  is  to  be  suppressed  must  itself  be  suppressed  also.  I 
repeat:  the  argument  proves  too  much.  The  fact  is  that  there 
is  one  denial  of  competition  which  is  the  right  of  all,  and  that 
there  is  another  denial  of  competition  which  is  the  right  of  none. 
All  of  us,  whether  out  of  a  trust  or  in  it,  have  a  right  to  deny 
competition  by  competing,  but  none  of  us,  whether  in  a  trust 
or  out  of  it,  have  a  right  to  deny  competition  by  arbitrary  decree, 
by  interference  with  voluntary  effort,  by  forcible  suppression  of 
initiative. 

Again :  To  claim  that  the  trust  should  be  abolished  or  con- 
trolled because  the  'great  resources  and  consequent  power  of  en- 
durance which  it  acquires  by  combination  give  it  an  undue  ad- 
vantage, and  thereby  enable  it  to  crush  conwetition,  is  equally 
an  argument  that  proves  too  much.  If  John  D.  Eockefeller  were 
to  start  a  grocery  store  in  his  individual  capacity,  we  should  not 
think  of  suppressing  or  restricting  or  hampering  his  enterprise 
simply  because,  with  his  five  hundred  millions,  he  could  afTord  to 
sell  groceries  at  less  than  cost  until  the  day  when  the  accumu- 
lated ruins  of  all  other  grocery  stores  should  afford  him  a  sure 
foundation  for  a  profitable  business.  But,  if  Eockefeller's  pos- 
session of  five  hundred  millions  is  not  a  good  ground  for  the  sup- 
pression of  his  grocery  store,  no  better  ground  is  the  control  of 
still  greater  wealth  for  the  suppression  of  his  oil  trust.  It  is 
true  that  these  vast  accumulations  under  one  control  are  abnormal 
and  dangerous,  but  the  reasons  for  them  lie  outside  of  and  behind 
and  beneath  all  trusts  and  industrial  combinations — reasons 
which  I  shall  come  to  presently, — reasons  which  are  all,  in  some 
form  or  other,  an  arbitrary  denial  of  libertv:  and  but  for  these 
reasons,  but  for  these  denials  of  liberty.  John  I).  Eockefeller  never 
could  have  acquired  five  hundred  millions,  nor  would  anv  com- 
bination of  men  be  able  to  control  an  aggregation  of  wealth  that 
could  not  be  easily  and  successfully  met  by  some  other  combina- 
tion of  men. 

Again:    There  is  no  warrant  in  reason  for  derivinsr  a  right  to 
control  trusts  from  the  state  grout  of  corporate  privileges  under 

254 


which  they  are  organized.  In  the  first  place,  it  being  pure  usurpa- 
tion to  presume  to  endow  any  body  of  men  with  rights  and  ex- 
emptions that  are  not  theirs  already  under  the  social  law  of  equal 
liberty,  corporate  privileges  are  in  themselves  a  wrong;  and  one 
wrong  is  not  to  be  undone  by  attempting  to  offset  it  with  an- 
other. But,  even  admitting  the  justice  of  corporation  charters, 
the  avowed  purpose  in  granting  them  is  to  encourage  -co-operation, 
and  thus  stimulate  industrial  and  commercial  development  for 
the  benefit  of  the  community.  Now,  to  make  this  encouragement 
an  excuse  for  its  own  nullification  by  a  proportionate  restriction 
of  co-operation  would  be  to  add  one  more  to  those  interminable 
imitations  of  the  task  of  Sisyphus  for  which  that  stupid  institu- 
tion which  we  call  the  state  has  ever  been  notorious. 

Of  somewhat  the  same  nature,  but  rather  more  plausible  at 
first  blush,  is  the  proposition  to  cripple  the  trusts  by  stripping 
them  of  those  law-created  privileges  and  monopolies  which  are 
conferred,  not  upon  trusts  as  corporate  bodies,  but  upon  sundry 
individuals  and  interests,  ostensibly  for  protection  of  the  pro- 
ducer and  inventor,  but  really  for  purposes  of  plunder,  and  which 
most  trusts  acquire  in  the  process  of  merging  the  original  capitals 
of  their  constituent  members.  I  refer,  of  course,  to  tariffs,  pat- 
ents, and  copyrights.  Now,  tariffs,  patents,  and  copyrights  either 
have  their  foundations  in  justice,  or  they  have  not  their  founda- 
tions in  justice.  If  they  have  their  foundations  in  justice,  why 
should  men  guilty  of  nothing  but  a  legitimate  act  of  co-operation 
and  partnership  be  punished  therefor  by  having  their  just  rights 
taken  from  them?  If  they  have  not  their  foundations  in  justice, 
why  should  men  who  refrain  from  co-operation  be  left  in  posses- 
sion of  unjust  privileges  that  are  denied  to  men  who  co-operate? 
If  tariffs  are  unjust,  they  should  not  be  levied  at  all.  If  patents 
and  copyrights  are  unjust,  they  should  not  be  granted  to  any- 
one whomsoever.  But,  if  tariffs  and  patents  and  copyrights  are 
just,  they  should  be  levied  or  granted  in  the  interest  of  all  who 
are  entitled  to  their  benefits  from  the  viewpoint  of  the  motives  in 
which  these  privileges  have  their  origin,  and  to  make  such  levy 
or  grant  dependent  upon  any  foreign  motive,  such,  for  instance, 
as  willingness  to  refrain  from  co-operation,  would  be  sheer  im- 
pertinence. 

Nevertheless,  at  this  point  in  the  hunt  for  the  solution  of  the 
trust  problem,  the  discerning  student  may  begin  to  realize  that 
he  is  hot  on  the  trail.  The  thought  arises  that  the  trusts, Instead 
of  growing  out  of  competition,  as  is  so  generally  supposed,  have 
been  made  possible  only  by  the  absence  of  competition,  only  by 
the  difficulty  of  competition,  only  by  the  obstacles  placed  in  the 


255 


way  of  competition — only,  in  short,  by  those  arbitrary  limitations 
of  competition  which  we  find  in  those  law-created  privileges  and 
monopolies  of  which  I  have  just  spoken,  and  in  one  or  two  others, 
less  direct,  but  still  more  far-reaching  and  deadly  in  their  de- 
structive influence  upon  enterprise.  And  it  is  with  this  thought 
that  anarchism,  the  doctrine  that  in  all  matters  there  should  be 
the  greatest  amount  of  individual  liberty  compatible  with  equality 
of  liberty,  approaches  the  case  in  hand,  and  offers  its  diagnosis 
and  its  remedy. 

The  first  and  great  fact  to  be  noted  in  the  case,  I  have  already  . 
hinted  at.  It  is  the  fact  that  the  trusts  owe  their  power  to  vast 
"accumulation  and  concentration  of  wealth,  unmatched,  and,  un- 
der present  conditions,  unmatchable,  by  any  equal  accumulation 
of  wealth,  and  that  this  accumulation  has  been  effected  by  the 
combination  of  separate  accumulations  only  less  vast  and  in  them- 
selves already  gigantic,  each  of  which  owed  its  existence  to  one 
or  more  of  the  only  means  by  which  large  fortunes  can  be  rolled 
up,  interest,  rent,  and  monopolistic  profit.  But  for  interest,  rent, 
and  monopolistic  profit,  therefore,  trusts  would  be  impossible. 
Now,  what  causes  interest,  rent,  and  monopolistic  profit?  For 
all  three  there  is  but  one  cause — the  denial  of  liberty,  the  suppres- 
sion of  restriction  of  competition,  the  legal  creation  of  monop- 
olies. 

This  single  cause,  however,  takes  various  shapes. 

Monopolistic  profit  is  due  to  that  denial  of  liberty  which 
takes  the  shape  of  patent,  copyright,  and  tariff  legislation,  patent 
and  copyright  laws  directly  forbidding  competition,  and  tariff 
laws,  placing  competition  at  a  fatal  disadvantage. 

Eent  is  due  to  that  denial  of  liberty  which  takes  the  shape  of 
land  monopoly,  vesting  titles  to  land  in  individuals  and  associa- 
tions which  do  not  use  it,  and  thereby  compelling  the  non-owning 
users  to  pay  tribute  to  the  non-using  owners  as  a  condition  of 
admission  to  the  competitive  market. 

Interest  is  due  to  that  denial  of  liberty  which  takes  the  shape 
of  money  monopoly,  depriving  all  individuals  and  associations, 
save  such  as  hold  a  certain  kind  of  property,  of  the  right  to  issue 
promissory  notes  as  currency,  and  thereby  compelling  all  holders 
of  property,  other  than  the  kind  thus  privileged,  as  well  as  all 
non-proprietors,  to  pay  tribute  to  the  holders  of  the  privileged 
property  for  the  use  of  a  circulating  medium  and  instrument  of 
credit  which,  in  the  complex  stage  that  industry  and  commerce 
have  now  reached,  has  become  the  chief  essential  of  a  competitive 

market. 

Now,  anarchism,  which,  as  I  have  said,  is  the  doctrine  that 

256 


in  all  matters  there  should  be  the  greatest  amount  of  individual 
liberty  compatible  with  equality  of  liberty,  finds  that  none  of 
these  denials  of  liberty  are  necessary  to  the  maintenance  of  equal- 
ity of  liberty,  but  that  each  and  every  one  of  them,  on  the  con- 
trary, is  destructive  of  equality  of  liberty.  Therefore  it  declares 
them  unnecessary,  arbitrary,  oppressive,  and  unjust,  and  demands 
their  immediate  cessation. 

Of  these  four  monopolies — the  banking  monopoly,  the  land 
monopoly,  the  tariff  monopoly,  and  the  patent  and  copyright 
monopoly — the  injustice  of  all  but  the  last-named  is  manifest 
even  to  a  child.  The  right  of  the  individual  to  buy  and  sell  with- 
out being  held  up  by  a  highwayman  whenever  he  crosses  an  im- 
aginary line  called  a  frontier;  the  right  of  the  individual  to  take 
possession  of  unoccupied  land  as  freely  as  he  takes  possession 
of  unoccupied  water  or  unoccupied  air;  the  right  of  the  indi- 
vidual to  give  his  I.  0.  U.,  in  any  shape  whatsoever,  under  any 
guarantee  whatsoever,  or  under  no  guarantee  at  all,  to  anyone 
willing  to  accept  it  in  exchange  for  something  else — all  these 
rights  are  too  clear  for  argument,  and  anyone  presuming  to  dis- 
pute them  simply  declares  thereby  his  despotic  and  imperialistic 
instincts. 

For  the  fourth  of  these  monopolies,  however, — the  patent  and 
copyright  monopoly — a  more  plausible  case  can  be  presented,  for 
the  question  of  property  in  ideas  is  a  very  subtle  one.  The  de- 
fenders of  such  property  set  up  an  analogy  between  the  pro- 
duction of  material  things  and  the  production  of  abstractions, 
and  on  the  strength  of  it  declare  that  the  manufacturer  of  mental 
products,  no  less  than  the  manufacturer  of  material  products,  is 
a  laborer  worthy  of  his  hire.  So  far,  so  good.  But,  to  make  out 
their  case,  they  are  obliged  to  go  further,  and  to  claim,  in  viola- 
tion of  their  own  analog}',  that  the  laborer  who  creates  mental 
products,  unlike  the  laborer  who  creates  material  products,  is 
entitled  to  exemption  from  competition.  Because  the  Lord,  in 
his  wisdom,  or  the  devil,  in  his  malice,  has  so  arranged  matters 
that  the  inventor  and  the  author  produce  naturally  at  a  disad- 
vantage, man,  in  his  might,  proposes  to  supply  the  divine  or 
diabolic  deficiency  by  an  artificial  arrangement  that  shall  not 
only  destroy  this  disadvantage,  but  actually  give  the  inventor 
and  author  an  advantage  that  no  other  laborer  enjoys — an  advan- 
tage, moreover,  which,  in  practice,  goes,  not  to  the  inventor  and 
the  author,  but  to  the  promoter  and  the  publisher  and  the  trust. 

Convincing  as  the  argument  for  property  in  ideas  may  seem 
at  first  hearing,  if  you  think  about  it  long  enough,  you  will  begin 
to  be  suspicious.  'The  first  thing,  perhaps,  to  arouse  your  sus- 

257 


picion,  will  be  the  fact  that  none  of  the  champions  of  such  prop- 
erty propose  the  punishment  of  those  who  violate  it,  contenting 
themselves  with  subjecting  the  offenders  to  the  risk  of  damage 
suits,  and  that  nearly  all  of  them  are  willing  that  even  the  risk  of 
suit  shall  disappear  when  the  proprietor  has  enjoyed  his  right 
for  a  certain  number  of  years.  Now,  if,  as  the  French  writer, 
Alphonse  Karr,  remarked,  property  in  ideas  is  a  property  like  any 
other  property,  then  its  violation/like  the  violation  of  any  other 
property,  deserves  criminal  punishment,  and  its  life,  like  that 
of  any  other  property,  should  be  secure  in  right  against  the  lapse 
of  time.  And,  this  not  being  claimed  by  the  upholders  of  prop- 
erty in  ideas,  the  suspicion  arises  that  such  a  lack  of  the  courage 
of  their  convictions  may  be  due  to  an  instinctive  feeling  that  they 
are  wrong. 

The  necessity  of  being  brief  prevents  me  from  examining  this 
phase  of  my  subject  in  detail.  Therefore  I  must  content  myself 
with  developing  a  single  consideration,  which,  I  hope,  will  prove 
suggestive. 

I  take  it  that,  if  it  were  possible,  and  if  it  had  always  been 
possible,  for  an  unlimited  number  of  individuals  to  use  to  an 
unlimited  extent  and  in  an  unlimited  number  of  places,  the  same 
concrete  things  at  the  same  time,  there  never  would  have  been 
any  such  thing  as  the  institution  of  property.  Under  those  cir- 
cumstances, the  idea  of  property  would  never  have  entered  the 
human  mind,  or,  at  any  rate,  if  it  had,  would  have  been  sum- 
marily dismissed  as  too  gross  an  absurdity  to  be  seriously  enter- 
tained for  a  moment.  Had  it  been  possible  for  the  concrete  crea- 
tion or  adaptation  resulting  from  the  efforts  of  a  single  individual 
to  be  used  contemporaneously  by  all  individuals,  including  the 
creator  or  adapter,  the  realization,  or  impending  realization,  of 
this  possibility,  far  from  being  seized  upon  as  an  excuse  for  a  law 
to  prevent  the  use  of  this  concrete  thing  without  the  consent  of 
its  creator  or  adapter,  and  far  from  being  guarded  against  as  an 
injury  to  one,  would  have  been  welcomed  as  a  blessing  to  all — • 
in  short,  would  have  been  viewed  as  a  most  fortunate  element  in 
the  nature  of  things.  The  raison  d'etre  of  property  is  found  in 
the  very  fact  that  there  is  no  such  possibility — in  the  fact  that 
it -is  impossible  in  the  nature  of  things  for  concrete  objects  to  be 
used  in  different  places  at  the  same  time.  This  fact  existing,  no 
person  can  remove  from  another's  possession  and  take  to  his  own 
use  another's  concrete  creation  without  thereby  depriving  that 
other  of  all  opportunitv  to  use  that  which  he  created,  and  for  this 
reason  it  became  socially  necessary,  since  successful  society  rests 
on  individual  initiative,  to  protect  the  individual  creator  in  the 

258 


Use  of  his  concrete  creations  by  forbidding  others  to  Use  them 
without  his  consent.  In  other  words,  it  became  necessary  to  insti- 
tute property  in  concrete  things. 

But  all  this  happened  so  long  ago  that  we  of  to-day  have  en- 
tirely forgotten  why  it  happened.  In  fact,  it  is  very  doubtful 
whether,  at  the  time  of  the  .institution  of  property,  those  who 
effected  it  thoroughly  realized  and  understood  the  motive  of  their 
course.  Men  sometimes  do  by  instinct  and  without  analysis  that 
which  conforms  to  right  reason.  The  institutors  of  property  may 
have  been  governed  by  circumstances  inhering  in  the  nature  of 
things,  without  realizing  that,  had  the  nature  of  things  been  the 
opposite,  they  would  not  have  instituted  property.  But  be  that 
as  it  may,  even  supposing  that  they  thoroughly  understood  their 
course,  we,  at  any  rate,  have  pretty  nearly  forgotten  their  under- 
standing. And  so  it  has  come  about  that  we  have  made  of  prop- 
erty a  fetich ;  that  we  consider  it  a  sacred  thing ;  that  we  have  set 
up  the  god  of  property  on  an  altar  as  an  object  of  idol-worship; 
and  that  most  of  us  are  not  only  doing  what  we  can  to  strengthen 
and  perpetuate  his  reign  within  the  proper  and  original  limits 
of  his  sovereignty,  but  also  are  mistakenly  endeavoring  to  extend 
his  dominion  over  things  and  under  circumstances  which,  in  their 
pivotal  characteristic,  are  precisely  the  opposite  of  those  out  of 
which  his  power  developed. 

All  of  which  is  to  say,  in  briefer  compass,  that  from  the 
justice  and  social  necessity  of  property  in  concrete  things  we  have 
erroneously  assumed  the  justice  and  social  necessity  of  property 
in  abstract  things — that  is,  of  property  in  ideas — with  the  result 
of  nullifying  to  a  large  and  lamentable  extent  that  fortunate  ele- 
ment in  the  nature  of  things,  in  this  case  not  hypothetical,  but 
real — namely,  the  immeasurably  fruitful  possibility  of  the  use 
of  abstract  things  by  any  number  of  individuals  in  any  number 
of  places  at  precisely  the  same  time,  without  in  the  slightest  de- 
gree impairing  the  use  thereof  by  any  single  individual.  Thus 
we  have  hastily  and  stupidly  jumped  to  the  conclusion  that  prop- 
erty in  concrete  things  logically  implies  property  in  abstract 
things,  whereas,  if  we  had  had  the  care  and  the  keenness  to  ac- 
curately analyze,  we  should  have  found  that  the  very  reason  which 
dictates  the  advisability  of  property  in  concrete  things  denies 
the  advisability  of  property  in  abstract  things.  We  see  here  a 
curious  instance  of  that  frequent  mental  phenomenon — the  pre- 
cise inversion  of  the  truth  by  a  superficial  view. 

Furthermore,  even  were  the  conditions  the  same  in  both 
cases,  and  concrete  things  capable  of  use  by  different  persons  in 


259 


different  places  at  the  same  time,  even  then,  I  say,  the  institu- 
tion of  property  in  concrete  things,  though  under  those  condi- 
tions manifestly  absurd,  would  he  infinitely  less  destructive  of 
individual  opportunities,  and  therefore  infinitely  less  dangerous 
and  detrimental  to  human  welfare,  than  is  the  institution  of  prop- 
erty in  abstract  things.  For  it  is  easy  to  see  that,  even  should  we 
accept  the  rather  startling  hypothesis  that  a  single  ear  of  corn  is 
continually  and  permanently  consumable,  or  rather  inconsuma- 
ble, by  an  indefinite  number  of  persons  scattered  over  the  surface 
of  the  earth,  still  the  legal  institution  of  property  in  concrete 
things  that  would  secure  to  the  sower  of  a  grain  of  corn  the  ex- 
clusive use  of  the  resultant  ear  would  not,  in  so  doing,  deprive 
other  persons  of  the  right  to  sow  other  grains  of  corn  and  become 
exclusive  users  of  their  respective  harvests;  whereas  the  legal 
institution  of  property  in  abstract  things  not  only  secures  to  the 
inventor,  say,  of  the  steam  engine,  the  exclusive  use  of  the  engines 
which  he  actually  makes,  but  at  the  same  time  deprives  all  other 
persons  of  the  right  to  make  for  themselves  other  engines  involv- 
ing any  of  the  same  ideas.  Perpetual  property  in  ideas,  then, 
which  is  the  logical  outcome  of  an)'  theory  of  property  in  abstract 
things,  would,  had  it  been  in  force  in  the  lifetime  of  James  Watt, 
have  made  his  direct  heirs  the  owners  of  at  least  nine-tenths  of  the 
now  existing  wealth  of  the  world;  and,  had  it  been  in  force  in  the 
lifetime  of  the  inventor  of  the  Koman  alphabet,  nearly  all  the 
highly  civilized  peoples  of  the  earth  would  be  to-day  the  virtual 
slaves  of  that  inventor's  heirs,  which  is  but  another  way  of  say- 
ing that,  instead  of  becoming  highly  civilized,  they  would  have 
remained  in  a  state  of  semi-barbarism.  It  seems  to  me  that  these 
two  statements,  which  in  my  view  are  incontrovertible,  are  in 
themselves  sufficient  to  condemn  property  in  ideas  forever. 

If,  then,  the  four  monopolies  to  which  I  have  referred  are  un- 
necessary denials  of  liberty,  and  therefore  unjust  denials  of  liber- 
ty, and  if  they  are  the  sustaining  causes  of  interest,  rent,  and 
monopolistic  profit,  and  if,  in  turn,  this  usurious  trinity 
is  the  cause  of  all  vast  accumulations  of  wealth — for  fur- 
ther proof  of  which  propositions  I  must,  because  of  the  limita- 
tion of  my  time,  refer  you  to  the  economic  writings  of  the  anarch- 
istic school — it  clearly  follows  that  the  adequate  solution  of  the 
problem  with  which  the  trusts  confront  us  is  to  be  found  only  in 
abolition  of  these  monopolies  and  the  consequent  guarantee  of 
perfectly  free  competition. 

The  most  serious  of  these  four  monopolies  is  unquestionably 
the  money  monopoly,  and  I  believe  that  perfect  freedom  in  finance 

260 


alone  would  wipe  out  nearly  all  the  trusts,  or  at  least  render  them 
harmless,  and  perhaps  helpful.  Mr.  Bryan  told  a  very  important 
truth  when  lie  declared  that  the  destruction  of  the  money  trust 
would  at  the  same  time  kill  all  the  other  trusts.  Unhappily,  Mr. 
Bryan  does  not  propose  to  destroy  the  money  trust.  He  wishes 
simply  to  transform  it  from  a  gold  trust  into  a  gold  and  silver 
trust.  The  money  trust  cannot  be  destroyed  hy  the  remonetiza- 
tion  of  silver.  That  would  be  only  a  mitigation  of  the  monop- 
oly, not  the  abolishment  of  it.  It  can  be  abolished  only  by 
monetizing  all  wealth  that  has  a  market  value — that  is,  by  giv- 
ing to  all  wealth  the  right  of  representation  by  currency,  and  to 
all  currency  the  right  to  circulate  wherever  it  can  on  its  own 
merits.  And  this  is  not  only  a  solution  of  the  trust  question,  but 
the  first  step  that  should  be  taken,  and  the  greatest  single  step 
that  can  be  taken,  in  economic  and  social  reform. 

I  have  tried,  in  the  few  minutes  allotted  to  me,,  to  state  con- 
cisely the  attitude  of  anarchism  toward  industrial  combinations. 
It  discountenances  all  direct  attacks  on  them,  all  interference 
with  them,  all  anti-trust  legislation  whatsoever.  In  fact,  it  re- 
gards industrial  combinations  as  very  useful  whenever  they  spring 
into  existence  in  response  to  demand  created  in  a  healthy  social 
body.  If  at  present  they  are  baneful,  it  is  because  they  are  symp- 
toms of  a  social  disease  originally  caused  and  persistently  aggra- 
vated by  a  regimen  of  tyranny  and  quackery.  Anarchism  wants 
to  call  off  the  quacks,  and  give  liberty,  nature's  great  cure-all,  a 
chance  to  do  its  perfect  work. 

Free  access  to  the  world  of  matter,  abolishing  land  monopoly ; 
free  access  to  the  world  of  mind,  abolishing  idea  monopoly;  free 
access  to  an  untaxed  and  unprivileged  market,  abolishing  tariff 
monopoly  and  money  monopoly — secure  these  and  all  the  rest 
shall  be  added  unto  you.  For  liberty  is  the  remedy  of  every  social 
evil,  and  to  anarchy  the  world  must  look  at  last  for  any  enduring 
guarantee  of  social  order. 

The  announcement  of  the  chairman  that  the  remainder  of  the 
afternoon  would  be  devoted  to  five-minute  talks  in  open  discus- 
sion of  the  day's  papers  was  met  with  calls  on  Governor  Pingree 
for  a  "speech."  AJter  several  minutes  of  applause,  the  governor 
stepped  forward  and  said: 

"Most  of  you  know  where  I  stand  in  regard  to  trusts.  I 
am  opposed  to  them ;  always  have  been.  I  claim  it  is  a  cow- 
ardly way  of  doing  business.  If  you  cannot  do  business 

261 


without  being  in  a  trust,  I  haven't  any  use  for  you.  Get  out.  I 
will  be  here  this  evening,  and  I  have  a  short  Daper  I  will  be 
pleased  to  read  to  you.  I  want  to  thank  you  for  this  invitation 
right  now." 

The  conference  took  a  recess  until  8  o'clock. 


EVENING  SESSION,   SEPTEMBER   14. 

Third  Vice-Chairman  Corliss  called  the  session  to  order  at 
8:05  o'clock,  and  Secretary  Easley  read  the  nominations  for 
membership  on  the  Committee  on  Eesolutions  as  follows: 


ALABAMA. — Eyre  Damar. 
ARIZONA. —  W.  C.  Campbell. 
ARKANSAS. — B.  J.  Brown. 
CALIFORNIA. — C.  D.  Willard. 
COLORADO. — Henry  V.  Johnson. 
DISTRICT    OF    COLUMBIA. — H.    T. 

Newcomb. 

DELAWARE. — Henry  Allaway. 
FLORIDA. — John  F.  Forbes. 
IDAHO. — Judge  Claggett. 
ILLINOIS. — W.  R.  Jewell. 
INDIANA. — A.  P.  Kent. 
IOWA. — Geo.  E.  Clark. 
KANSAS. — W.  J.  Bailey. 
KENTUCKY. — P.  W.  Hardin. 
LOUISIANA. — W.  W.  Howe. 
MAINE.— A.  E.  Rogers. 
MARYLAND. — Geo.  R.  Gaither,  Jr. 
MASSACHUSETTS. — John      Graham 

Brooks. 

MICHIGAN. — Cyrus  G.  Luce. 
MINNESOTA. — W.  B.  Douglas. 
MISSISSIPPI. — J.  W.  Cutrer. 
MISSOURI. — E.  C.  Crow. 
MONTANA. — H.  H.  Swain. 


NEBRASKA. — Edward  Rosewater. 

NEVADA. — Francis  G.  Newlands. 

NEW  HAMPSHIRE.  —  Henry  W. 
Blair. 

NEW  .  JERSEY. — Edward  Quinton 
Keasbey. 

NEW  MEXICO. — C.  J.  Gavin. 

NEW  YORK.— Albert  Shaw. 

NORTH  DAKOTA. — Wm.  T.  Per- 
kins. 

OHIO.— I.  F.  Mack. 

OR'EGON. — E.  Hofer. 

PENNSYLVANIA. — W.   P.   Potter. 

SOUTH  CAROLINA. — A.  C.  Kauf- 
man. 

SOUTH  DAKOTA.  —  Freeman 
Knowles. 

TENNESSEE. — C.  E.  Snodgrass. 

TEXAS. — Cecil  Smith. 

UTAH. — George  W.  Bartch. 

WEST  VIRGINIA. — Geo.  W.  Atkin- 
son. 

WISCONSIN. — John  Nagle. 

WYOMING. — J.  Dana  Adams. 


NATIONAL    ASSOCIATION    OF    MANUFACTURERS. — Theodore    C.    Search, 
President. 

NORTHWESTERN  TRAVELING  MEN'S  ASSOCIATION. — D.  K.  Clink,  Secretary 
and  Treasurer. 

AMERICAN  FEDERATION  OF  LABOR. — Samuel  Gompers,  President. 

BROTHERHOOD  OF  RAILROAD  TRAINMEN. — P.  H.  Morrissey,  Grand  Master. 

UNITED  GARMENT  WORKERS  OF  AMERICA. — Henry  White,  General  Secre- 
tary. 

SINGLE  TAX  LEAGUE  OF  THE  UNITED  STATES. — Louis  F.  Post. 

ORDER  OF  RAILWAY  CONDUCTORS. — E.  E.  Clark,  Grand  Chief  Conductor. 

BROTHERHOOD  OF  LOCOMOTIVE  FIREMEN. — W.  S.  Carter. 

262  • 


NATIONAL  GRANGE  PATRONS  OF  HUSBANDRY.— S.  H.  Ellis. 

ILLINOIS  COMMERCIAL  MEN'S  ASSOCIATION.— R.  A.  Cavenaugh. 

NEW  ENGLAND  FREE  TRADE  LEAGUE. — Byron  W.  Holt. 

AMERICAN  ACADEMY  OF  POLITICAL  AND  SOCIAL  SCIENCE.— John  H.  Gray. 

NATIONAL  ALLIANCE  THEATRICAL  STAGE  EMPLOYES.— Lee  M.  Hart,  Gen- 
eral Secretary  and  Treasurer. 

NATIONAL  BUSINESS  MEN'S  LEAGUE. — John  W.  Ela. 

AMERICAN  ANTI-TRUST  LEAGUE. — M.  L.  Lockwood,  President. 

KNIGHTS  OF  LABOR. — J.  G.  Schonfarber. 

UNITED  STATES  EXPORT  ASSOCIATION.— rFrancis  B.  Thurber,  President. 

COMMERCIAL  TRAVELERS'  NATIONAL  LEAGUE. — P.  E.  Dowe,  President. 

NATIONAL  GRAIN  GROWERS'  ASSOCIATION. — S.  H.  Greeley. 

NATIONAL  FARMERS'  ALLIANCE  AND  INDUSTRIAL  UNION  OF  AMERICA.— 
John  Hill,  Jr. 

NATIONAL  TAX  LEAGUE. — Lawson  Purdy. 

NATIONAL  SOCIALISTS'  LEAGUE. — Thomas  J.  Morgan. 

BRICKLAYERS'  AND  MASONS'  UNION  OF  AMERICA. — M.  R.  Grady. 

MILLERS'  NATIONAL  ASSOCIATION. — F.  H.  Magdeburg. 

FARMERS'  NATIONAL  CONGRESS. — B.  F.  Clayton. 

ASSOCIATION  OF  WESTERN  MANUFACTURERS. — Walter  Fieldhouse. 

AMERICAN  SOCIAL  SCIENCE  ASSOCIATION. — C.  R.  Henderson. 

INTERNATIONAL  TYPOGRAPHICAL  UNION. — Samuel  B.  Donnelly,  President. 

TRAVELING  MEN'S  PROTECTIVE  ASSOCIATION. — M.  W.  Phalen,  President. 

Ex-OrFicio. — Franklin  H.  Head,  President  Civic  Federation  of  Chicago. 
Ralph  M.  Easley,  Secretary  Civic  Federation  of  Chicago. 

A  motion  was  made  by  P.  E.  Dowe  of  N~ew  York  that  the 
names  of  all  persons  who  had  been  admitted  to  the  floor  since 
the  organization  was  effected  be  stricken  from  the  rolls.  There 
was  no  second,  and  on  calls  for  the  regular  order  of  business 
Chairman  Corliss  introduced  as  the  first  speaker  of  the  evening, 
Governor  Hazen  S.  Pingree  of  Michigan,  who  was  obliged  to  wait 
several  minutes  for  the  applause  to  subside  before  he  could  speak. 
His  subject  was, 

"The  Effect  of  Trusts  on  Our  National  Life  and  Citizenship" : 
HAZEF  S.  PINGKEE. 

Governor  of  Michigan. 

In  all  that  has  been  said  about  trusts,  scarcely  a  word  has 
been  written  or  spoken  from  the  standpoint  of  their  effect  on 
society. 

In  this  busy,  rushing,  feverish  world,  everything  is  ruled  by 
the  commercial  spirit.  The  dollar  seems  to  be  the  standard  for 
measuring  all  things. 

In  gathering  material  for  the  use  of  this  conference,  the  Civic 

263 


Federation  of  Chicago  sent  out  circulars  containing  in  all  sixty- 
nine  questions.  These  inquiries  were  addressed  to  trusts,  whole- 
sale dealers,  commercial  travelers'  organizations,  railroads,  labor 
associations,  contractors,  manufacturers,  economists,  financiers, 
and  public  men. 

Only  one  of  these  sixty-nine  questions  related  in  any  way  to 
the  effect  of  trusts  upon  society.  I  do  not  call  attention  to  this 
in  order  to  criticise  the  Civic  Federation. 

I  do  so  for  the  purpose  of  showing  that  in  all  the  discussion 
of  trusts,  there  is  no  indication  that  any  thought  whatever  has 
been  given  to  their  effect  upon  our  national  life,  upon  our  citi- 
zenship, and  upon  the  lives  and  characters  of  the  men  and  women 
who  are  the  real  strength  of  our  republic. 

I  think  that  this  is  the  most  important  consideration  of  all. 
Everybody  has  been  asking  whether  more  money  can  be  made 
by  trusts  than  by  small  corporations  and  individuals — whether 
cost  of  production  will  be  increased  or  decreased — whether  in- 
vestors will  be  benefited  or  injured — whether  the  financial  system 
of  the  country  will  be  endangered — whether  we  can  better  com- 
pete for  the  world's  trade  with  large  combinations  or  trusts — 
whether  prices  will  be  raised  or  lowered — whether  men  will  be 
thrown  out  of  employment — whether  wages  will  be  higher  or 
lower — whether  stricter  economy  can  be  enforced,  and  so  on. 

In  other  words,  the  only  idea  nowadays  seems  to  be  to  find 
out  how  business  or  commerce  will  be  affected  by  trusts.  The 
"Almighty  Dollar"  is  the  sole  consideration. 

I  believe  that  all  these  things  are  minor  considerations.  I 
think  that  it  is  of  far  greater  importance  to  inquire  whether  the 
control  of  the  world's  trade,  or  anv  of  the  other  commercial  ad- 
vantages claimed  for  the  trust,  are  worth  the  price  we  pav  for 
them.  * 

Will  it  pay  us  either  as  individuals  or  as  a  nation  to  encourage 
trusts  ? 

Instead  of  discussing  the  question  from  the  standpoint  of 
commercial  gain,  let  us  view  it  as  patriots. 

I  believe  that  a  conference  of  this  kind  should  not  attempt 
to  judge  a  question  so  important  to  our  national  welfare  as  this, 
by  the  selfish  standard  of  commercial  greed.  I  think  that  loftier 
motives  should  rule  us  in  this  discussion. 

The  commercial  and  financial  aspects  of  the  trust  problem  are 
important.  I  believe,  however,  that  there  are  considerations  more 
important  to  us  as  a  nation. 

In  this  republic  of  ours  we  are  fond  of  saying  that  there  are 

204 


GEORGE  R.  GAITHER,  JR. 
EDWARD  W.  BEMIS 
GEORGE  GUNTON 


JOHN  W.  HAYES 
LOUIS  F.  POST 
JEFFERSON  DAVIS 


no  classes.    In  fact,  we  boast  of  it.    We  say  that  classes  belong 
to  monarchies,  not  to  republics. 

Nevertheless,  none  of  us  can  dispute  the  fact  that  our  society 
is  divided  into  classes,  and  well  defined  ones,  too.  They  are  not 
distinguished  by  differences  of  social  standing.  That  is,  we 
have  no  aristocratic  titles,  no  nobility. 

The  distinction  with  us  is  based  upon  wealth.  The  man  is 
rated  by  the  property  he  owns.  Our  social  and  political  leaders 
and  speakers  deny  this.  In  doing  so,  however,  they  ignore  actual 
conditions.  They  discuss  what  ought  to  be  under  our  form  of 
government — not  what  is. 

The  strength  of  our  republic  has  always  been  in  what  is  called 
our  middle  class.  This  is  made  up  of  manufacturers,  jobbers, 
middle  men,  retail  and  wholesale  merchants,  commercial  trav- 
elers and  business  men  generally.  It  would  be  little  short  of 
calamity  to  encourage  any  industrial  development  that  would 
affect  unfavorably  this  important  class  of  our  citizens. 

Close  to  them  as  a  strong  element  of  our  people  are  the  skilled 
mechanics  and  artisans.  They  are  the  sinew  and  strength  of  the 
nation. 

While  the  business  of  the  country  has  been  conducted  by  per- 
sons and  firms,  the  skilled  employee  has  held  close  and  sympa- 
thetic relations  with  his  employer. 

He  has  been  something  more  than  a  mere  machine.  He  has 
felt  the  stimulus  and  ambition  which  goes  with  equality  of  oppor- 
tunity. These  have  contributed  to  make  him  a  good  citizen. 
Take  away  that  stimulus  and  ambition,  and  we  lower  the  stand- 
ard of  our  citizenship.  Without  good  citzenship  our  national 
life  is  in  danger. 

It  seems  to  me,  therefore,  that  the  vital  consideration  con- 
nected with  this  problem  of  the  trust  is  its  effect  upon  our  mid- 
dle class — the  independent,  individual  business  man  and  the 
skilled  artisan  and  mechanic. 

How  does  the  trust  affect  them?  It  is  admitted  by  the  apol- 
ogist for  the  trust  that  it  makes  it  impossible  for  the  individual 
or  firm  to  do  business  on  a  small  scale. 

It  tends  to  concentrate  the  ownership  and  management  of  all 
lines  of  business  activity  into  the  hands  of  a  very  few.  No  one 
denies  this. 

This  being  so,  it  follows  that  the  independent,  individual  busi- 
ness man,  must  enter  the  employment  of  the  trust.  Self-preserva- 
tion compels  it.  Duty  to  his  family  forces  him  to  it. 

He  becomes  an  employee  instead  of  an  employer.  His  trusted 
foremen  and  his  employees  must  follow  him. 

265 


They  have  been  in  close  and  daily  association  with  him.  The 
new  order  of  things  compels  them  to  separate.  They  are  both  to 
become  a  part  of  a  vast  industrial  army  with  no  hopes  and  no  as- 
pirations— a  daily  task  to  perform  and  no  personal  interest  and 
perhaps  no  pride  in  the  success  of  their  work. 

Their  personal  identity  is  lost.  They  become  cogs  and  little 
wheels  in  a  great  complicated  machine.  There  is  no  real  advance 
for  them. 

They  may  perhaps  become  larger  cogs  or  larger  wheels,  but 
they  can  never  look  forward  to  a  life  of  business  freedom. 

A  very  select  few  may  become  heads  of  trusts,  but  such  oppor- 
tunities will  be  rare  indeed.  They  will,  therefore,  be  entirely 
useless  as  incentives  to  the  ambition  of  the  army  of  those  em- 
ployed by  the  trusts.  As  a  result  of  the  ceaseless  and  heartless 
grind  of  the  trusts,  in  the  almost  insane  desire  to  control  trade, 
ambition,  and  perhaps  inventive  genius,  will  be  deadened  and 
killed. 

The  middle  class  of  which  I  speak  will  lose  their  sense  of  inde- 
pendence. They  are  already  being  deprived  of  that  equality  of  op- 
portunity which  has  made  this  nation  what  it  is.  It  is  equality  of 
opportunity  which  has  attracted  to  this  country  the  millions  of 
people  of  other  nations  who  have  helped  make  American  citizen- 
ship and  American  institutions  the  greatest  and  best  in  the  world. 

The  trust  is  therefore  the  forerunner,  or  rather  the  creator  of 
industrial  slavery. 

The  master  is  the  trust  manager  or  director.  It  is  his  duty  to 
serve  the  soulless  and  nameless  being  called  the  stockholder.  To 
the  latter  the  dividend  is  more  important  than  the  happiness  or 
prosperity  of  any  one. 

The  slave  is  the  former  merchant  and  business  man,  and  the 
artisan  and  mechanic,  who  once  cherished  the  hope  that  they 
might  sometime  reach  the  happy  position  of  independent  owner- 
ship of  a  business. 

Commercial  feudalism  is  the  logical  outcome  of  the  trust.  The 
trust  manager  is  the  feudal  baron. 

These  may  perhaps  be  harsh  characterizations,  but  who  can 
deny  their  truth?  Honesty  to  ourselves  and  loyalty  to  our  coun- 
try and  its  free  institutions  compel  us  to  face  and  recognize  the 
situation. 

We  cannot  be  true  to  our  republic  by  ignoring  these  things. 
We  cannot  be  honest  to  the  people,  either  at  this  conference  or  in 
our  legislative  assemblies  by  confining  our  deliberations  to  the 
commercial  advantages  and  disadvantages  of  the  trust. 

It  is  better  to  be  forever  poor,  but  independent  and  happy  as 

266 


individuals,  than  to  lay  the  foundations  for  industrial  tyranny 
and  slavery. 

Personal  liberty  is  rather  to  be  chosen  than  great  riches. 

Equality  of  opportunity  to  all  men  is  better  than  the  control 
of  the  world's  trade. 

The  effect  of  the  trust  upon  our  national  life  and  our  citizen- 
ship will  not  be  sudden  perhaps.  It  will  rather  be  a  silent  and 
gradual  change.  It  may  not  be  observed,  at  once,  but  its  in- 
fluence will  nevertheless  be  felt. 

The  warning  with  which  the  history  of  the  decadence  and 
downfall  of  other  nations  furnishes  us  may  not  be  heeded  now. 
If  not,  we  may  pay  the  usual  penalty  of  slavery  to  commercial 
avarice  a<nd  greed. 

Increase  of  the  wealth  of  the  country  is  greatly  to  be  desired, 
but  if  the  people  are  to  be  degraded  to  industrial  slaves,  wealth 
under  such  conditions  is  a  curse. 

•  If  our  independent  and  intelligent  business  men  and  artisans 
are  to  be  crowded  out  of  existence  as  a  class  by  the  trust,  there  is 
no  remedy  too  drastic  for  the  trust. 

Some  may  think  it  is  too  early  to  sound  a  note  of  warning  of 
this  kind,  but  the  time  to  check  an  evil  tendency  is  when  it  first 
shows  itself. 

We  have  given  the  private  corporation  "too  much  rope." 
Some  say  give  it  more  rope  and  it  will  hang  itself.  In  other 
words  they  claim  that  the  trust  problem,  if  left  alone,  will  work 
out  its  own  solution. 

I'do  not  believe  in  such  a  policy.  There  is  too  much  at  stake. 
The  most  important  element  of  our  citizenship  is  in  the  bal- 
ance. We  cannot  afford  to  san  the  strength  of  our  democracy  in 
order  to  forward  an  experiment. 

I  favor  complete  and  prompt  annihilation  of  the  trust, — with 
due  regard  for  property  rights,  of  course. 

I  care  more  for  the  independence  and  manliness  of  the  Amer- 
ican citizen  than  for  all  the  gold  or  silver  on  or  in  the  world.  It 
is  better  to  cherish  the  happiness  of  Ihe  American  home  than  to 
control  the  commerce  of  the  globe. 

The  degrading  process  of  the  trust  means  much  to  the  future 
of  a  republic  founded  upon  democratic  principles.  A  democratic 
republic  cannot  survive  the  disappearance  of  a  democratic  popu- 
lation. 


267 


CHARLES  FOSTER. 

Ex-Governor  of  Ohio. 

Speaking  on  "The  Desirability  of  Trusts,"  ex-Governor 
Charles  Foster  of  Ohio  said: 

This  conference,  so  unique  in  its  conception,  responded  to  so 
universally,  resulting  in  a  gathering  of  distinguished  representa- 
tives of  all  the  states  of  the  nation,  attests  the  deep  concern  of  the 
people  in  the  subject,  which  we  have  voluntarily  consented  to  de- 
liberate upon. 

An  intelligent  and  imposing  body  of  men  are  here  assembled; 
and  it  may  also  be  said  that  no  economic  subject  of  such  far 
reaching  importance,  was  ever  before  deliberated  upon.  How  very 
important  that  our  deliberations  should  eventuate  in  a  line  of 
suggestion  (we  can  only  advise)  that  will,  when  sanctioned  by  law, 
conserve  the  greatest  and  best  interests  of  the  greatest  country  on 
earth. 

We  are  considering  the  great  question  of  the  combination  of 
capital  as  it  relates  to,  and  effects  all  of  the  interests  of  the  coun- 
try great  and  small.  These  combinations  are  popularly  known  as 
trusts,  and  by  a  common  impulse,  the  whole  country  has  assumed 
the  position  of  antagonism  to  them. 

The  gentleman  from  Texas  who  so  eloquently  entertained  us 
yesterday,  stated  that  his  state  had  no  industrial  development, 
that  they  sold  raw  material,  and  bought  their  supplies,  as  the 
reason  for  their  fierce  opposition  to  trusts. 

He  also  eloquently  portrayed  the  superiority  of  manhood  over 
money. 

It  strikes  me  that  if  the  Texas  •neople  had  sufficient  enterprise 
to  establish  industries,  to  consume  their  cotton,  wool  and  other 
raw  material,  their  manhood  would  not  deteriorate,  their  opposi- 
tion to  trusts  would  be  less  vehement,  and  they  would  have  more 
money. 

The  evolution  in  business  from  the  individual  to  the  partner- 
ship, and  from  the  partnership  to  the  corporation  was  no  more 
natural  and  necessary  than  is  the  evolution  from  the  corporation 
to  the  trust.  Let  us  look  the  situation  squarely  in  the  face. 

Denounce  it  as  we  may,  it  has  come  to  stay.  Why?  Because 
the  gigantic  business  operations  of  the  present  and  future  cannot 
be  carried  on  without  it. 

Through  the  trust,  the  enormous  waste  that  is  entailed  upon 
business  operations  by  competition,  is  saved ;  the  product  and  the 

268 


service  performed  is  cheapened.  Labor  will  have  the  better  op- 
portunity to  enhance  wages  and  shorten  the  hours  of  toil,  as  is  so 
signally  illustrated  in  the  railroad  service  of  the  country. 

Through  the  trust,  the  superior  inventive  genius  of  our  peo- 
ple (because  of  universal  education)  will  ha\e  improved  oppor- 
tunity. 

It  is  a  gratifying  fact  that  we  are  making  rapid  progress  in 
securing  the  markets  of  the  world  for  our  manufactured  products. 
For  this,  we  are  first  indebted  to  our  economic  policy  of  protection 
that  gave  the  incentive  to  an  enterprising  people;  and  secondly, 
to  the  much  abused  trust.  With  a  settled  policy  in  relation  to 
them,  it  is  not  a  wild  prophecy  to  make  that  in  the  near  future 
our  foreign  trade  will  be  largely  increased,  and  that  in  less  time 
than  many  of  us  imagine,  this  country  will  become  the  money 
center  of  the  world.  Not  only  will  our  foreign  trade  be  greatly 
enhanced,  but  the  greater  consumptive  power  of  our  people  will 
largely  increase  our  home  business. 

The  enormous  increase  of  wealth  in  this  country  has  already 
lowered  the  rate  of  interest,  and  the  end  in  this  direction  has  not 
been  reached. 

When  the  trusts  shall  have  been  properly  safeguarded  by  law 
their  securities  will  furnish  a  means  of  safe  investment,  at  a  some- 
what higher  rate  of  interest  than  will  be  paid  by  government, 
state,  or  municipal  bonds,  thus  affording  the  opportunity  .for  in- 
vestment for  savings  banks  and  people  of  moderate  means. 

It  is  certain  that  the  amount  of  idle  money  in  the  hands  of  our 
people  will  be  very  great.  How  valuable,  then,  will  be  the  oppor- 
tunity to  safety  invest  it,  even  at  moderate  rates. 

We  must  not  neglect  to  take  note  of  the  fact  that  the  history 
of  this  country  has  been  that  of  great  growth  territorially;  of  great 
expansion,  if  you  please.  Up  to  the  present,  every  addition  to  our 
territory,  however  much  misguided  people  have  opposed  these 
additions,  has  proved  to  be  a  blessing  in  added  power,  glory  and 
manhood. 

So  now,  whether  the  present  large  acquisitions  shall  prove  to 
be  blessings  (as  they  will  be,  even  greater  than  some  of  the  ac- 
quisitions of  the  past)  or  not,  it  is  clear  that  by  an  energetic 
appreciation  of  the  new  conditions,  we  shall  add  greatly  to  our 
material  interests  without  any  deterioration  of  the  manhood  of 
our  people. 

The  isthmus  canal  is  certain  to  be  constructed,  and  then,  with 
naval  stations  at  Honolulu,  in  the  Ladrones,  and  in  the  Philip- 
pines, with  the  powerful  aid  of  the  trusts,  who  can  match  us  in 


269 


facilities  for  conducting  the  commerce  with  seven  hundred  mill- 
ions, or  more,  of  people  on  the  other  side  of  the  Pacific  ocean? 

Seward's  dream  that  the  Pacific  side  of  our  country  was  likely 
to  become  the  most  important,  may  prove  to  be  a  reality. 

The  trusts  will  prove  to  be  the  great  reliance  of  our  country 
in  successfully  conducting  the  great  industries  that  are  to  supply 
the  greatly  enhanced  foreign  commerce,  that  the  ^opportunities 
of  the  near  future  are  opening  to  us. 

Have  no  fear  that  the  trusts  will  seriously  impose  upon  the 
people  in  the  prices  that  will  have  to  be  paid  for  their  products. 
The  germs  of  death  are  in  them  and  their  only  method  to  prevent 
an  early  demise,  is  to  avoid  extortion. 

It  may  be  a  debatable  question  £s  to  whether  the  Standard  Oil 
Company  has  been,  and  is  a  blessing  to  the  country  or  not.  Cer- 
tain it  is,  however,  that  it  has  developed  an  industry  in  something 
more  than  thirty  years,  from  practically  nothing,  to  an  annual 
volume  of  perhaps  more  than  $150,000,000,  of  which  it  retains 
about  $25,000,000  and  gives  $125,000,000  to  the  people  of  tlu- 
country.  It  has  greatly  lessened  the  cost  of  light;  it  is  paying 
more  than  a  hundred  millions  of  dollars  annually  for  oil  and  labor, 
and  pays  labor  more  than  any  other  employees  receive. 

It  has  added  more  than  one  thousand  millions  to  the  wealth 
of  the  country,  and  contributes  sixtv  millions  a  year  to  our  credit 
in  its  exports. 

But  there  are  reasons  for  the  control  of  trusts  by  law.  Over- 
capitalization must  be  guarded  against. 

While  I  have  always  been,  and  am  yet,  a  thorough  believer  in 
the  protective  policy,  I  regard  the  appropriation  of  the  tariff  to 
enhance  the  price  of  any  product  of  the  country,  as  a  misuse  of 
the  purpose  intended.  When  any  trust  shall  avail  itself  of  a  tax 
upon  imports  to  enhance  the  price  of  the  product,  then  the  tax 
should  be  modified  or  wholly  removed. 

A  bureau  of  government,  or  a  board,  similar  to  the  interstate 
commerce  commission,  should  be  established,  to  whom  all  trusts 
shall  apply  for  license,  after  being  incorporated,  and  to  whom 
reports  as  exhaustive  as  is  required  of  the  national  banks,  should 
be  made.  The  terms  of  the  license  should  not  be  illiberal,  but 
it  certainly  should  provide  against  overcapitalization. 

All  profits  beyond  6  per  cent  should  be  taxed  for  the  benefit  of 
the  government. 

As  probably  the  power  does  not  exist  in  Congress  to  make  the 
requirements  suggested,  it  seems  then,  that  it  is  the  plain  duty  of 
this  conference  to  request  Congress  to  submit  amendments  to 
the  Constitution,  giving  it  necessary  power,  not  only  to  control 

270 


the  trusts,  but  as  the  suggestion  is  made  to  tax  their  profits,  also 
to  provide  for  an  income  tax. 

It  is  evident  now,  that  the  country  hereafter  must  rely  upon 
internal  taxation  for  revenue  to  support  the  government.  An 
income  tax  is  the  most  equitable  form  of  taxation  and  can  be  paid 
with  less  hardship  than  any  other.  It  is  objected  to  on  the  ground 
that  it  exposes  the  secrets  of  business,  and  because  it  is  generally 
evaded.  If  the  return  is  honorably  made^,  I  apprehend  there  will 
be  little  ground  for  this  objection. 

It  may  be  that  our  powers  do  not  give  us  jurisdiction  over  the 
latter  subject. 

If  this  view  should  be  taken,  then  let  us  appeal  to  the  wealthy 
people  of  the  country  to  take  it  up  and  move  for  its  adoption."  It 
is  certain  they  could  not  render  themselves  a  better  service. 

It  seems  to  me  that  as  both  those  who  oppose,  and  those  who 
favor  trusts  are  in  accord  in  favoring  the  assertion  of  a  power 
strong  enough  to  either  destroy  or  regulate  them,  that  we  ought  to 
be  able  to  get  together  on  the  proposition  to  amend  the  Constitu- 
tion of  the  United  States. 

I  apprehend  but  for  the  inherent  support  of  the  doctrine  of 
state  rights  by  our  Southern  friends  the  proposition  would  be 
readily  agreed  to.  It  is  evident  that  the  states  acting  independ- 
ently cannot  successfully  deal  with  this  great  question. 

As  the  country  expands  the  weakness  of  state  control  of  great 
questions  becomes  more  apparent,  and  the  need  of  the  use  of  fed- 
eral power  becomes  greater. 

The  law  of  this  country  has  been  one  of  expansion  and  growth, 
and  I  may  appropriately  say,  that  when  we  cease  to  grow  our  de- 
cline will  begin. 

I  believe  the  great  mission  designed  by  Providence  for  this 
country  has  only  begun ;  that  it  will  go  on  evangelizing  and  civ- 
ilizing the  world  until  all  lands  and  all  peoples  will  be  in  the  full 
enjoyment  of  free  institutions. 

JEFFEKSON  DAVIS. 

Attorney-General  of  Arkansas. 

Following  Mr.  Foster,  Attorney-General  Jefferson  Davis  of 
Arkansas  spoke  extemporaneously  on  "Arkansas  Anti-Trust 
Law,"  saying:  • 

Coming  as  I  do  from  a  land  that  lies  to  the  South,  it  is  with 
great  gratification  that  I  accepted  your  invitation  and  have  come 
here  from  the  Southland  to  give  you  my  ideas,  crude  as  they  are, 


on  the  subject  before  this  convention,  one  that  is  threatening  to 
sap  the  very  life  blood  of  our  American  institutions. 

It  is  with  a  feeling  of  trepidation  that  I  enter  upon  this  dis- 
cussion, and  I  was  very  glad  indeed  when  I  received  notice  from 
your  secretary  that  this  meeting  should  not  be  political.  Had  it 
been  otherwise,  I  should  not  have  attended,  because  beyond  and 
above  all  things  else  I  hold  and  pride  my  democracy.  If  in  this 
discussion  I  should  unwittingly  say  anything  that  would  be  im- 
proper, or  transcend  the  proprieties  of  this  occasion,  I  ask  that 
you  attribute  it  to  my  zeal,  and  not  to  a  willful  desire  to  infringe 
on  the  proprieties  of  this  convention. 

The  subject,  ladies  and  gentlemen,  that  has  been  assigned  to 
me  is  "The  Arkansas  Law  as  Applied  to  Trusts." 

Before  entering  upon  that  discussion,  ladies  and  gentlemen, 
permit  me  to  say  that  I  am  surprised  at  some  of  the  sentiments 
expressed  here  to-night  by  the  last  gentleman  who  has  taken 
his  seat  upon  the  platform.  He  tells  us  that  trusts  have  come 
to  stay.  That  may  be  true — I  doubt  it  sincerely.  But  if  it  be 
true,  ladies  and  gentlemen,  that  trusts  have  come  to  stay,  arid 
if  the  withering  blight  of  trusts  is  to  overshadow  our  fair  land, 
then  away  with  American  liberty,  American  patriotism,  the  God 
of  the  American  people.  Mr.  Chairman,  we  all  know — at  least 
the  legal  fraternity  who  face  me  in  this  convention — know  that 
any  conspiracy  to  control  prices — and  that  is  but  an  epitome  of 
trusts — is  a  crime  at  the  common  law,  and  that  wherever  the 
common  law  prevails  in  this  broad  land  of  ours,  under  that,  with- 
out federal  interference  and  without  any  legislation,  under  the 
common  law  alone,  the  crime  of  conspiracy  to  control  prices  may 
be  punished  criminally.  We  know,  ladies  and  gentlemen,  that 
the  trust  is  but  a  conspiracy  to  control  prices.  What  is  the  trust? 
You  have  had  it  differently  defined  during  the  sitting  of  this 
convention.  I  say  to  you,  ladies  and  gentlemen,  a  trust  is  but 
the  ripened  fruit  of  misused  tariff  legislation,  as  the  robbery  of 
the  people  upon  the  silver  question  was.  We  know,  ladies  and 
gentlemen — and  while  I  do  not  intend  to  invade  the  province 
of  politics,  and  while  I  never  in  my  life  prepared  a  speech  for 
any  convention,  perhaps  you  have  observed  that  ere  this — I  say 
to  you  that  a  trust  is  but  the  ripened  fruit.  We  know,  ladies  and 
gentlemen,  that  money  is  the  blood  of  commerce;  we  know,  like 
the  blood  that  flows  from  the  heart  to  the  extremities  and  helps 
the  circulation,  money  should  flow  from  the  centers  to  the  ex- 
tremities and  back  again,  to  help  the  circulating  commercial 
life.  But  we  know  that  by  a  system  of  tariff  taxation,  by  repre- 
sentations, that  the  money  has  flowed  from  the  extremities  to 

272 


the  centers,  and  has  not  returned  again,  but  it  has  been  congealed 
and  it  is  only  in  the  center.  Not  only  that,  but  the  money  of 
the  constitution,  the  money  of  the  people,  -the  money  of  our 
fathers,  the  money  that  we  all  love  so  well,  not  by  law  but  by 
precedent,  has  been  taken  from  the  people,  and  it,  too,  has  con- 
gealed in  the  east  and  in  the  north,  and  with  this  great  mass 
of  wealth,  fellow-citizens,  you  know  full  well  that  men  are  at- 
tempting to-day,  with  this  great  mass  of  wealth  they  are  attempt- 
ing to  control  the  price  of  products,  and  the  trust  is  but  the  out- 
growth, but  the  ripened  fruit,  as  it  were,  the  outgrowth  of  these 
two  gigantic  evils — and  this  distinguished  gentleman  tells  us 
it  has  come  to  stay!  It  means  that  its  father  and  mother  came 
to  stay,  and  it  is  but  their  offspring,  ladies  and  gentlemen. 

Now  to  the  discussion  that  has  been  assigned  to  me.  Applause 
is  always  permissible  at  any  part  of  this  discussion,  ladies  and  gen- 
tlemen, and  in  the  few  brief  moments  for  the  discussion  of  one  of 
the  best  laws,  I  think,  upon  the  statute  books  of  any  state  in  the 
Union,  I  find  in  the  few  moments  I  will  be  unable  to  go  over  the 
field  as  I  would  like,  and  point  out  to  you,  as  I  see  it,  one  of  the 
best  remedies  on  earth  to  destroy  the  thing  which  this  gentleman 
has  told  us  came  to  stay.  I  say  to  you,  ladies  and  gentlemen, 
that  we  cannot  destroy  it  successfully  without  federal  interfer- 
ence and  state  legislation  in  harmonious  action.  We  do  not 
need  so  much  legislation.  It  is  not  the  legislative  branch  of  our 
government  that  in  my  brief  experience  as  attorney  of  one  of 
the  best  states  in  the  galaxy  of  states  that  I  have  the  honor  to 
represent  here — it  is  true  we  raise  more  corn  and  cotton  and 
pretty  women  in  Arkansas  than  any  place  on  earth — it  is  not 
of  the  legislation  department  of  my  state  or  this  beautiful  South- 
land of  which  I  would  complain,  but  it  is  with  another  function 
of  government — it  is  with  the  judicial  department  of  this  great 
commonwealth  of  ours  that  I  would  complain  to  you  to-night. 
What!  they  say.  You  should  not  criticise  the  judiciary!  There 
isn't  a  man,  fellow-citizens,  in  all  this  broad  land  of  ours  that  would 
pay  greater  tribute  to  the  honorable,  to  the  just,  the  upright 
and  conscientious  judge,  than  I.  But  do  you  remember,  ladies 
and  gentlemen,  that  Abraham  Lincoln,  one  of  the  greatest  patri- 
ots this  country  has  ever  produced,  in  the  Dred  Scott  decision 
he  criticises  more  severely  than  it  is  possible  for  me  to  do  a  de- 
cision of  the  Supreme  Court  of  this  land  of  ours,  and  do  you  re- 
member, ladies  and  gentlemen,  just  a  short  time  ago,  in  the 
income-tax  decision  to  which  my  distinguished  friend  referred  so 
learnedly,  that  Justice  Harlan  criticises  more  severely  than  it 
is  possible  for  me  to  do  the  most  infamous  decision  that  has  ever 

273 


been  handed  down  by  a  court  of  last  resort  in  any  country  or 
time? 

I  have  not  lost -my  faith  in  God  and  man.  The  saddest  fate 
that  can  befall  a  human  soul  is  when  it  loses  its  faith  in  God 
and  man,  and  had'  I  lost  that  gem,  though  the  thrones  of  this 
world  stood  empty  in  my  path,  I  would  go  wandering  back  to  my 
childhood  in  tears  till  I  found  it.  It  is  not  of  the  legislative  de"- 
partment  that  I  would  complain,  but  of  the  judicial  department. 
I  hold  in  my  hand  a  copy  t>f  one  of  the  best  laws,  in  my  judg- 
ment, that  was  ever  enacted  in  a  state  upon  the  subject  of  trusts. 
This  law  provides  in  a  few  words,  "Any  corporation  organized 
under  the  laws  of  this  or  any  other  state  or  country  and  transact- 
ing or  conducting  any  kind  of  business  in  this  state,  which  shall 
create,  enter  into,  or  become  a  member  of  or  a  party  to  any  pool 
or  trust  or  agreement  to  regulate  or  fix  the  price  of  any  article 
of  mechanics  or  merchandise  or  any  article  or  thing  whatsoever, 
shall  be  deemed  and  adjudged'guiltv  of  a  felony,  and  subject 
to  the  penalties  of  this  act/'  I  come  from  a  people  that  is  in 
no  humor  to  temporize  with  one  of  the  most  menstrous  evils  that 
has  ever  "come  to  stay."  Gentlemen — excuse  me,  but  I  have 
been  talking  politics — ladies  and  gentlemen,  do  you  remember 
in  the  158  United  States  Supreme  Court,  the  case  of  Hall  against 
Virginia,  where  the  United  States  Supreme  Court  says  that  a 
corporation  is  but  a  creature  of  the  law,  and  that  the  creature 
cannot  control  the  creator?  This  law  provides  that  a  corpora- 
tion so  created  cannot  migrate  to  another  sovereignty  unless  by 
the  consent  of  that  sovereignty;  and  it  goes  further,  and  says 
that  that  sovereignty  may  prescribe  any  condition  upon  which 
it  may  enter  its  borders  and  transact  its  business.  Now,  taking 
that  as  a  basis,  if  a  corporation  is  considered  by  the  ultimate 
authority,  the  government,  but  a  creature  of  the  law,  then  it 
remains  for  you  to  say  whether  the  creature  shall  control  the  cre- 
ator, or  whether  the  creator  shall  control  the  creature. 

Now,  ladies  and  gentlemen,  the  Federal  Court  of  this  land 
has  said  that  these  creatures  can  only  exist  in  the  land  of  their 
creation,  and  they  can  migrate  to  another  sovereignty  only  upon 
the  will  of  that  sovereignty,  no  matter  how  cautious  that  will  may 
be.  Now,  fellow-citizens,  we  know  that  a  trust  is  but  a  combina- 
tion of  wealth  formed  for  the  purpose  of  controlling  prices  ;^  we 
know,  fellow-citizens,  that  it  is  a  corporation ;  we  know  that  it  is 
a  creature  of  the  law,  and  I  am  here  to  say  to-night  that  the  only 
remedy,  in  my  judgment,  for  its  extermination — because  exter- 
minate it  we  must — the  only  remedy  for  its  extermination  is  to 
bring  upon  it  the  strong  hand  of  the  law,  and  I  am  surprised  to 

274 


hear  the  sentiment  expressed  before  this  vast  and  intelligent 
audience  that  the  trust  is  a  good  thing.  I  say  to  you,  ladies  and 
gentlemen,  that  this  is  not  a  political  subject — it  is  a  question 
of  economics.  We  have  come  to  the  divide  of  the  waters;  we 
have  come  to  the  point,  ladies  and  gentlemen,  where  we  must 
stand  up  like  patriotic  American  citizens  and  meet  the  conditions 
that  confront  us  to-day. 

Now,  fellow-citizens,  Arkansas  started  the  agitation,  but  Texas 
went  us  one  better,  and  Texas  has  to-day  possibly  a  better  law  than 
that.  Do  you  know,  ladies  and  gentlemen,  do  you  know  that  the 
Supreme  Court  of  the  State  of  Missouri  has  decided,  and  that 
decision  has  never  been  questioned  by  any  lawyer  of  ability — 
the  Supreme  Court  of  Missouri  has  absolutely  decided  that  you 
cannot  collect  a  bill  rendered  for  trust  goods?  Then  if  that  is 
true,  fellow-citizens,  if  that  is  true,  ladies  and  gentlemen,  then 
you  see  that  this  trust  is  an  outlaw  in  the  land.  And,  ^gentlemen, 
when  I  speak  the  word  "trust"  I  use  it  as  it  is  known  to-day — 
they  ought  to  have  called  it  "octopus,"  or  something  that  sym- 
bolized its  character — but  they  have  stolen  the  livery  of  heaven 
to  serve  the  devil  in. 

I  find  that  my  time,  twenty  minutes,  has  long  since  expired, 
and  I  have  just  fairly  started  the  discussion  of  the  Arkansas 
law  as  applied  to  trusts.  Now,  fellow-citizens,  now  I'll  say  why 
I  forget  myself  and  call  you  fellow-citizens :  I  have  been  speak- 
ing for  the  last  sixty-five  days  in  Arkansas  on  this  very  proposi- 
tion, and  I  only  caught  the  train  by  a  forced  drive  to  make  the 
train  to  come  here,  and  hence  you  will  excuse  me  when  I  greet 
you  as  "fellow-citizens."  I  say,  ladies  and  gentlemen,  that  I 
find  my  time  has  expired,  and  of  course  I  will  not  ask  this  intel- 
ligent audience  to  bear  with  me  further,  and  I  shall  submit  the 
question  with  just  one  other  consideration.  Ladies  and  gentle- 
men, the  only  way  to  grapple  with  this  matter,  as  I  have  stated 
before,  is  by  the  strong  arm  of  the  law. 

A  Voice :     State  or  national? 

Mr.  Davis:  State  and  national  combined,  and  in  order  to 
carry  to  a  successful  issue,  I  am  here  to  tell  you,  ladies  and  gen- 
tlemen, that  we  have  got  to  reconstruct  our  judiciary.  I  am 
here  to  say,  ladies  and  gentlemen,  that  if  we  ever  have  another 
civil  war — and  God  grant  we  may  not — it  will  be  brought  about, 
in  my  humble  judgment,  by  judge-made  law.  I  say  to  you, 
ladies  and  gentlemen,  that  it  is  one  of  the  great  evils  that  threat- 
ens this  republic  to-dav — judge-made  law — the  judiciary  of  the 
country  invading  the  province  of  the  legislative  department  of 
this  country. 

275" 


Now,  fellow — ladies  and  gentlemen,  'f  I  have  unwittingly  in 
these  few  scattering  remarks  said  anything,  I  am  glad  at  least  I 
have  furnished  some  amusement  for  this  conference,  and  if  you'll 
just  come  down  to  Arkansas,  the  home  of  the  red  apple  and  the 
pretty  women,  I'll  treat  you  as  nicely  as  I  can. 


GEOEGE  GUNTON. 

Publisher  Cfunton's  Magazine. 

During  the  remarks  of  Professor  George  Gunton  of  New 
York,  who  spoke  on  "The  Public  and  the  Trusts,"  the  spectators 
became  so  demonstrative  over  the  speaker's  pro-trust  views  that 
the  chairman  had  to  threaten  to  have  the  galleries  cleared.  Pro- 
fessor Gunton's  paper  was  as  follows : 

The  trust  question  is  only  a  new  phase  of  an  old  problem,  the 
problem  of  free  industrial  enterprise.  Notwithstanding  that 
everybody  knows  that  the  marvelous  progress  of  the  last  three 
quarters  of  a  century  is  mainly  due  to  the  introduction  of  im- 
proved methods  of  industry,  every  improvement  since  Wyatt's 
spinning  frame  and  Hargreaves'  spinning  jenny  has  had  to  fight 
its  way  against  the  popular  prejudice  of  the  time.  The  hand  loom 
weavers  marched  through  England  and  broke  the  power  looms. 
Hargreaves,  Arkwright  and  Crompton  were  driven  from  their 
homes  for  inventing  new  methods  of  spinning. 

Now,  after  three  quarters  of  a  century's  experience,  in  which 
the  fallacy  of  this  policy  has  become  notorious,  we  are  face  to  face 
with  another  movement  of  the  same  character.  The  present  agi- 
tation against  trusts  has  all  the  characteristics  of  the  anti-ma- 
chinery riots  of  a  century  ago.  It  pervades  the  attitude  of  both 
laborers  and  business  men  alike.  Workingmen  give  about  the 
same  reasons  for  opposing  the  introduction  of  new  machines  as 
did  the  neighbors  of  Crompton  and  Arkwright  for  breaking  their 
spinning  frames.  The  business  men  who  twenty-five  years  ago 
were  among  the  hated  organizers  of  corporations  are  now  among 
the  agitators  against  trusts.  And  now  the  movement  is  taking  on 
a  political  form.  Men  of  national  repute  and  leaders  of  great  po- 
litical parties,  candidates  for  the  highest  and  most  responsible 
positions  in  the  nation,  are  asking  the  people  to  reverse  the  policy 
of  industrial  freedom  and  return  to  the  doctrine  of  arbitrary  pa- 
ternalism, specifically  to  suppress  large  corporations.  Are  the 
American  people  ready  for  such  a  step? 

276 


There  is  only  one  point  of  view  from  which  this  subject  can 
properly  be  considered — the  interest  of  the  public;  the  public  as 
representing  the  consumers  who  are  interested  in  superior  com- 
modities at  low  prices;  the  public  as  representing  the  laborers 
who  are  interested  in  permanent  employment  and  good  wages; 
the  public  as  representing  the  farmers  who  are  interested  in  cheap 
transportation  and  the  advantages  of  the  modern  products  of 
science,  art  and  literature.  It  is  in  these  aspects  of  the  subject, 
and  not  in  the  confusing  clamor  and  sensational  subterfuge  of 
campaign  oratory,  that  the  American  people  are  interested. 
The  question  for  this  conference  to  ask,  the  question  for  the  people 
of  the  United  States  to  ask,  is :  Are  trusts  inimical  to  public  wel- 
fare in  all  or  any  of  these  respects? 

It  must  be  remembered,  first  of  all,  that  the  trust,  be  it  good 
or  bad,  is  only  one  among  a  large  number  of  experiments  in  in- 
dustrial organization,  which  the  progress  of  the  last  fifty  years 
has  evolved.  One  of  the  marked  features  of  the  economic  de- 
velopment of  the  century  is  the  radical  change  that  has  taken 
place  in  the  character  of  competing  units.  Under  the  primitive 
hand  labor  method,  the  competing  unit  was  the  individual.  With 
the  development  of  factory  methods,  the  individual  as  a  com- 
peting unit  was  superseded  by  partnerships,  because  they  could 
more  economically  employ  the  new  methods.  With  the  growth  of 
invention,  partnerships  were  superseded  by  corporations.  With 
the  growing  completeness  of  machinery  and  magnitude  of  busi- 
ness, corporations  grew  larger  and  larger,  until  the  corporation 
is  now  the  prevailing-  form  in  the  most  advanced  countries. 

Nor  is  this  limited  to  the  capitalist  side  of  industry.  It  is 
equally  characteristic  of  the  labor  side.  The  competing  unit  in 
the  labor  market  is  no  longer  the  individual  laborer,  but  the 
group,  the  union.  The  factory  system  has  made  it  impossible  for 
individual  laborers  to  be  competitors,  because  it  is  impossible  for 
them  to  make  individual  contracts.  In  all  matters  pertaining  to 
wages,  hours  of  labor,  conditions  of  work,  whether  by  piece  or 
by  the  day,  it  is  the  group  and  not  the  individual  that  is  con- 
sidered. Each  factory,  and  in  most  instances  each  industry,  pays 
uniform  wages,  works  the  same  hours,  and  has  substantially  the 
same  conditions,  and  when  they  are  altered  for  one  they  are 
altered  for  all.  In  short,  the  progress  during  the  nineteenth  cen- 
tury has  irrevocably  established  the  group  as  the  competing  unit ; 
the  uni6n  as  the  unit  on  the  labor  side,  the  corporation  as  the 
unit  on  the  capital  side. 

Now  the  trust  was  one  of  the  experiments  in  the  evolution  of 
this  group  unit.  Numerous  forms  of  organization  and  associa- 

277 


tion  were  tried.  Corners,  associations  to  fix  prices,  were  tried. 
But  these  were  uneconomic  and  failed,  usually  wrecking  some- 
body in  the  collapse.  The  trust  was  another  form.  It  differed 
from  these  in  that  it  was  an  attempt  to  integrate  productive 
forces.  Corners  and  trade  associations  were  mere  manipulators 
of  prices,  not  producers.  Trusts  were  hona  fide  producers. 

The  difference  between  the  trust  and  the  ordinary  corpora- 
tions was  not  economic,  but  legal.  The  trusts  are  a  formal  merg- 
ing of  a  number  of  corporations  or  firms  under  one  management, 
which  holds  the  property  in  trust  for  its  original  owners,  giving 
certificates  for  their  respective  claims.  There  have  been  very 
few  bona  fide  trusts ;  the  Standard  Oil  trust,  the  sugar  trust  and 
a  few  others.  But  through  the  intense  popular  opposition,  re- 
sulting in  adverse  legislation,  these  have  all  disappeared.  They 
have  been  disbanded  and  converted  into  simple  corporations, 
with  capital  stock  owned  by  whomsoever  chooses  to  invest,  and 
governed  by  the  majority  vote  of  the  stockholders.  So  that,  if 
there  was  anything  peculiar  or  alarming  in  trusts,  the  evil  has  dis- 
appeared, because  the  trust  is  gone. 

In  reality,  then,  what  we  have  are  simply  corporations.  The 
whole  question  which  this  conference  is  called  to  consider  is: 
What  is  the  influence  of  large  corporations  upon  public  welfare? 

First,  then,  what  is  the  effect  of  large  corporations  upon  the 
quality  and  price  of  the  community's  supply  of  commodities? 
This  question  is  one  of  fact,  and  can  only  be  adequately  answered 
by  experience.  The  history  of  corporations  on  this  point  is  al- 
most too  obvious  to  need  reciting.  The  evidence  abounds  on  every 
hand.  While  experience  differs  in  different  industries,  as  it  nec- 
essarily must,  the  tendency  is  universal  that  with  the  growth  of 
large  corporations  the  quality  of  the  commodities  improves,  and 
the  prices  fall.  It  was  in  obedience  to  this  principle  that  cor- 
porations came  into  existence.  A  long  series  of  experiments 
taught  that  under  certain  conditions  large  capital  could  be  used 
to  greater  advantage  than  small  capital.  It  could  produce  more 
at  the  same  cost,  give  a  larger  aggregate  Drofit,  by  selling  the 
products  at  lower  prices.  As  the  experiments  proved  successful 
they  were  increased,  and  so  from  small  individual  concerns  to 
partnerships,  then  to  corporations,  the  process  went  on  and  on, 
and  if  not  arbitrarily  interrupted  will  continue  to  go  on  just  so 
long  as  it  will  yield  any  advantage.  Just  so  long  as  adding  an- 
other million  to  the  plant  will  increase  the  earning  capacity  of 
both  the  old  and  new  capital,  the  additions  will  continue  to  be 
made,  and  as  soon  as  the  point  is  reached  where  to  increase  the 
size  fails  to  increase  the  economy,  it  will  stop.  Clearly,  the  his- 

278 


tory  of  industrial  growth  and  prosperity  is  the  'history  of  cor- 
porate development.  Without  corporations  productive  efficiency 
could  not  have  progressed  beyond  the  economic  status  of  the 
small  individual  concerns  of  the  last  century. 

The  era  of  corporations  in  this  country  is  since  the  war.  It 
is  during  that  period  that  our  industrial  expansion  has  been  so 
enormous  and  the  great  corporate  interests  have  developed.  If 
we  take  the  groups  of  industry  in  which  the  commodities  are  pro- 
duced by  corporations,  by  individuals  or  small  capitalists,  we  get 
a  fair  view  of  the  difference  in  the  influence  of  the  two  types  of 
industrial  effort  upon  prices  and  public  welfare.  These  data 
are  easily  found,  already  classified,  from  1860  to  1891  in  the  Sen- 
ate report  on  wholesale  prices  and  wages,  which  is  the  most  ex- 
haustive collection  of  industrial  data  ever  printed  in  any  lan- 
guage. In  the  table  given  in  Part  I  (pp.  30  to  52)  the  prices  of 
over  two  hundred  articles  are  given  every  year  from  1860  to  1891. 
Of  these  58  had  risen  in  price,  some  100  per  cent,  and  a  very  large 
proportion  from  30  to  70  per  cent.  "With  one  or  two  exceptions 
these  were  all  agricultural  or  raw  material  products,  in  which 
little  corporate  capital  was  employed.  On  the  other  hand  the 
tables  give  140  groups  of  manufactured  products,  mostly  pro- 
duced by  corporations,  and  some  of  them  by  very  large  cor- 
porations, using  most  modern  machinery,  and  in  all  these  prices 
had  fallen  varying  from  6  to  40  per  cent.  At  the  same  time  wages 
rose,  chiefly  in  the  manufacturing  and  mercantile  industries,  68 
per  cent.  That  is  to  say,  through  the  economies  of  corporate 
methods,  from  1860  to  1891,  the  purchasing  power  of  $he  day's 
work  was  increased  over  72  per  cent,  which  is  equivalent  to  an 
absolute  increase  in  public  welfare  of  24  per  cent  every  ten  years. 

While  this  is  true  of  corporate  industries  in  general,  as  com- 
pared with  non-corporate  industries,  it  is  most  markedly  true  of 
very  large  corporations.  If  we  take  the  concerns  where  millions 
are  invested  by  a  single  corporation,  like  the  Standard  Oil  Com- 
pany, the  American  Sugar  Refining  Companv.  the  great  railroads, 
the  Carnegie  Steel  Company,  we  find  that  their  products  have 
undergone  the  greatest  improvement  in  quality  and  the  greatest 
reduction  in  price.  Without  the  immensely  large  capitals  in- 
vested by  these  great  corporations,  many  of  the  great  improve- 
ments accomplished  during  the  last  twenty  years  would  have  been 
absolutely  impossible.  Take  for  instance  the  Carnegie  Company. 
Nothing  short  of  tens  of  millions  invested  under  one  manage- 
ment could  have  developed  the  extraordinary  improvements 
which  have  revolutionized  both  the  quality  and  price  of  iron  and 
steel  products.  With  small  concerns  of  less  than  a  million  each, 

279 


that  could  not  have  been  done.  The  same  is  true  of  our  great  rail- 
road systems.  No  small  or  individual  enterprise  could  have  given 
us  the  marvelous  development  in  railroading  of  the  last  twenty- 
five  years,  which  has  constantly  improved  the  service  and  so 
greatly  reduced  the  cost  to  the  public.  In  1873  it  cost  2.21  cents 
a  mile  to  transport  a  ton  of  freight.  Through  the  increased  in- 
vestments and  improved  facilities,  the  price  has  been  gradually 
reduced  year  by  year  until  now  it  only  costs  75-hundredths  of  a 
cent  a  mile  per  ton.  The  surface  railroad  systems  throughout  this 
country  are  another  illustration  of  what  large  corporations  can 
and  do  accomplish.  It  used  to  cost  ten  cents  to  ride  a  few  blocks 
in  a  dingy,  dirty  horse  car,  in  every  city  in  this  country.  With 
the  development  of  large  corporations,  electricity  has  superseded 
horses,  large,  light  and  wholesome  cars  have  replaced  dingy  boxes, 
and  fares  have  been  reduced  one-half,  with  transfers  to  nearly  all 
connecting  lines,  a  result  that  could  not  have  been  accomplished 
under  small  separate  concerns. 

The  Standard  Oil  Company,  the  most  hated  of  all  large  cor- 
porations, is  another  conspicuous  illustration  of  this  fact.  The 
immense  investment  involved  in  thousands  of  miles  of  pipe  line 
and  millions  of  gallons  of  storage  capacity,  which  takes  the  oil 
from  the  wells  and  delivers -it  at  the  seaboard  without  the  touch 
of  human  hand,  and  the  immense  sums  expended  in  experimen- 
tation for  an  improved  quality  of  the  product,  which  have  resulted 
in  reducing  the  price  of  oil  (in  gold)  715  per  cent  since  that  cor- 
poration was  organized,  required  tens  and  even  hundreds  of  mill- 
ions of  capital,  which  only  a  colossal  corporation  could  furnish. 
This  corporation,  by  its  immense  capital,  preserves  the  oil  indus- 
try to  this  country.  But  for  it  the  American  market  for  petrol- 
eum would  be  supplied  by  Eussian  producers.  Kussia  protects 
its  oil  producers  by  a  200  per  cent  tariff;  we  put  ours  upon  the 
free  list.  Only  the  competition  of  the  Standard  Oil  Company, 
through  the  immense  economies  it  has  developed,  of  which  the 
smaller  concerns  now  have  the  benefit,  keeps  Eussian  oil  out  of 
the  American  market.  That  company  furnishes  an  unlimited 
cash  market  for  every  barrel  of  petroleum  that  it  produces  in 
this  country.  Moreover,  it  gives  employment  to  35,000  American 
laborers,  pays  $100,000  a  day  in  wages,  and  exports,  in  competi- 
tion with  Eussia,  into  Europe  and  Asia,  nearly  1,000,000,000  gal- 
lons of  oil  a  year,  bringing  about  $60,000,000  in  gold  into  the 
country.  Here  is  an  industry,  all  told,  which  furnishes  employ- 
ment to  about  45,000  American  laborers,  paying  about  $125,000 
a  day  in  wages,  bringing  a  balance  of  $60,000,000  of  gold  a  year 
into  the  country,  all  of  which  would  be  lost  to  this  country  but  for 

280 


the  economic  energy  and  superiority  of  the  Standard  Oil  Com- 
pany. Small  refineries,  such  as  those  now  outside  the  Standard, 
could  not  hold  the  American  market  a  month  in  competition 
with  the  Russians.  In  short,  it  has  preserved  the  industry  to  this 
country,  and  at  the  same  time  improved  the  quality  of  the  peo- 
ple's light  and  reduced  its  price  75  per  cent;  and  all  this  without 
government  aid,  purely  as  a 'highly  developed  productive  enter- 
prise competing  against  the  government-aided  capital  of  Russia. 
I  could  go  through  the  whole  list  of  industries  where  great  im- 
provements have  heen  made  and  large  reduction  in  prices  ac- 
crued, and  substantially  the  same  facts  will  be  found. 

Next,  what  is  the  influence  of  corporations  upon  the  condi- 
tions of  labor?  It  is  commonly  asserted  that  large  corporations 
tend  to  destroy  the  laborer's  liberty  and  individuality  by  making 
him  a  part  of  a  productive  machine.  Mr.  Cleveland  sounded 
this  note  in  his  last  message  to  Congress.  A  little  touch  of  fact 
would  show  this  to  be  a  pure  phantom  of  the  imagination.  Noth- 
ing could  be  more  contrary  to  the  whole  history  of  wage  labor. 
If  there  were  any  truth  in  this,  we  might  expect  to  find  that  labor- 
ers had  more  freedom  and  greater  individuality  before  the  wage 
system  began.  Yet  everybody  knows  that  then  they  had  neither 
liberty  nor  individuality;  that  it  was  not  until  long  after  the  wage 
system  came  that  laborers  acquired  any  liberty,  political  rights  or 
social  individuality. 

The  laborer's  freedom  and  individuality  depend  upon  two 
things — permanence  of  employment  and  good  wages.  Wherever 
the  employment  of  labor  is  most  permanent  and  wages  are  high- 
est, there  the  laborer  is  most  intelligent,  has  the  greatest  free- 
dom and  the  strongest  individual  identity.  Where  do  laborers 
get  these  conditions?  It  is  not  where  capital  is  small  and  em- 
ployers are  poor.  On  the  contrary,  it  is  where  large  corporations 
prevail  that  wages  are  highest  and  employment  most  continuous, 
and  ever}rbody  knows  it  is  there  where  the  laborers  are  most 
independent.  It  is  notorious  that  large  corporations  have  the 
least  influence  over  the  opinions  and  individual  conduct  of  their 
laborers.  Let  it  be  known  that  a  large  corporation  is  trying  to 
influence  the  election  of  candidates  for  office,  and  that  is  the 
signal  for  the  working  men  to  vote  against  them.  Instead  of  be- 
ing controlled  by  the  corporations  they  act  almost  uniformly  on 
the  rule  of  defying  and  opposing  them. 

Nor  is  there  any  loss  of  individual  liberty  in  becoming  a 
fractional  part  of  a  large  productive  concern.  What  society  wants 
is  not  individuality  as  producers  but  individuality  as  citizens. 
What  we  need  is  that  the  laborer  should  give  less  and  less  of  his 

281 


personal  energy  to  earning  a  living  and  more  and  more  to  his 
social  and  individual  improvement.  A  permanent  stipulated  in- 
come is  the  first  step  toward  real  individual  freedom  for  the  labor- 
ers. Nothing  is  so  depressing  to  manhood,  nothing  makes  the 
weak  so  cowardly,  as  precariousness  of  income.  The  small  busi- 
ness man  who  does  not  know  from  quarter  to  quarter,  and  some- 
times from  month  to  month,  whether  he  can  meet  his  obligations, 
is  neither  as  brave,  as  intelligent  nor  as  free  a  citizen  as  the  wage 
laborer  in  the  safe  employ  of  a  large  corporation.  As  a  matter  of 
fact,  the  corporation  and  banker  have  far  more  influence  over 
the  votes  of  small  business  men  whom  they  have  befriended  or 
patronized  than  they  have  over  their  own 'laborers.  A  laborer's 
freedom  does  not  depend  upon  the  fact  that  he  works  for  wages, 
but  on  the  amount  of  his  wages.  "With  high  wages  and  permanent 
employment  the  laborer's  freedom  and  welfare  is  secured.  The 
laborer  has  not  a  single  interest,  social,  economic  or  political,  in 
the  existence  of  employers  with  small  capital. 

How  do  large  corporations  affect  the  interest  of  the  farmers? 
There  is  probably  no  class  in  the  community  who  derive  more 
benefit  from  the  economic  improvements  of  large% corporations 
than  do  the  farmers.  All  the  great  improvements  in  tools,  archi- 
tecture, sanitation,  domestic  appointments,  art,  literature  and 
general  refinement,  are  the  products  of  industrial  centers  where 
large  capitalistic  enterprises  abound.  Every  form  of  com- 
modity outside  of  food  which  enters  into  the  farmer's  life  has 
been  immensely  improved  and  greatly  cheapened  by  the  efforts 
of  large  corporations.  Transportation,  which  is  an  important 
item  in  the  farmer's  economy,  has  been  reduced  50  per  cent  dur- 
ing the  last  twenty-five  years,  as  will  be  seen  by  the  following 
table : 

Average  rate  per  Average  rate  per 

ton  per  mile.  ton  per  mile. 

Year.  (cents.)  Year.  (cents.) 

1873.-                ..2.210  1886 ...               ..1.042 

1874 2.040  1887-.   1.034 

1875  -    -    1.810  1888 ... 0.977 

1876 1.855  1889.-.    :_.I.0.970 

1877 1.524  1890 0.927 

1878 1.401  1891 0.929 

1879 :..-.  -.1.201  1892 0.941 

1880 1.318  1893 0.893 

1881   1.264  1894 -...0.864 

1882 1.236  1895 0.839 

1883 1.224  1896 0.806 

1884 1.125  1897 •___  .0.798 

1885 1.036  1898 0.753 

282 


"While  the  farmer  has  received  all  the  advantages  produced  hy 
large  corporations  in  lower  prices  of  everything  he  buys,  and 
lower  transportation,  the  price  of  what  he  sells  has  undergone 
very  little  fall,  and  of  many  products  no  fall  at  all,  and  some 
have  even  risen. 

What  is  the  influence  of  large  corporations  upon  business 
stability  and  prosperity?  This  is  one  of  the  most  important  fea- 
tures of  the  subject.  The  greatest  menace  to  modern  society  is 
business  depressions,  which  usually  axe  the  result  of  ignorant 
eagerness  among  competitors.  A  slight  boom  in  business  leads 
to  a  rash  increase  of  output.  Without  any  general  knowledge  of 
what  is  being  done  elsewhere  each  hopes  to  fill  the  new  void,  with 
the  result  of  an  increase  of  output  wholly  disproportionate  to  the 
demand.  For  instance,  the  Illinois  farmer,  when  the  price  of 
corn  is  high,  will  double  his  acreage  for  corn,  and  next  year  finds 
that  he  can  hardly  sell  the  corn  at  any  price,  and  is  compelled 
to  use  it  for  fuel.  Large  concerns  tend  to  remedy  this  evil  on 
tlve  same  principle  that  they  invest  heavily  in  experimentation. 
They  take  pains  to  gather  accurate  information  of  the  condition 
of  their  business  throughout  the  world.  They  find  it  pays  to  be 
informed  as  to  what  next  year's  demand  is  likely  to  be.  Their 
investments  are  so  large  that  they  could  not  afford  seriously  to 
miscalculate  the  demands  of  the  market.  With  their  compa'ra- 
tively  accurate  information,  they  adjust  their  production  with 
great  precision  to  the  present  and  probable  future  demand.  As 
a  matter  of  fact,  in  lines  of  industry  where  the  very  largest  con- 
cerns are  organized  there  is  the  least  perturbation.  If  the  rais- 
ing of  corn  were  in  the  hands  of  a  few  well  informed  corporations 
instead  of  thousands  of  uninformed  small  farmers,  the  erratic 
ups  and  downs  in  corn  farming  would  be  largely  avoided.  Indus- 
trial depressions  can  never  be  eliminated  until  the  relation  of 
productive  enterprise  to  general  consumption  is  reduced  to  some 
degree  of  precision,  which  the  small  go-as-you-please  producers 
can  never  do. 

Large  corporations  are  superior  to  small  concerns;  first,  be- 
cause by  the  use  of  large  capital  and  superior  methods  they  im- 
prove the  quality  and  reduce  the  price  of  commodities;  second, 
they  are  more  favorable  than  smaller  concerns  to  high  wages, 
and  individual  freedom  of  laborers;  third,  by  introducing 
scientific  precision  into  industry  they  tend  to  increase  the  per- 
manence of  employment  and  reduce  the  tendency  to  industrial 
depressions,  all  of  which  are  vital  elements  in  the  nation's  pros- 
perity and  progress. 

In  studying  the  literature  against  large  corporations  one  is 

283 


impressed  by  the  marked  absence  of  careful  presentation  of  facts 
and  rational  discussion  of  the  case.  There  seems  to  be  no  at- 
tempt to  apply  economic  principles  or  recognize  the  great  law  of 
societary  evolution.  The  only  hint  thus  far  of  a  policy  to  be 
adopted  is  the  proposition  of  Mr.  Bryan,  which  is  that  Congress 
pass  a  law  forbidding  all  corporations  to  do  business  outside  the 
state  in  which  they  are  incorporated  without  a  license  from  the 
federal  government.  It  is  difficult  to  imagine  a  gentleman  who 
is  about  to  be  for  the  second  time  a  candidate  for  the  Presidency 
of  the  United  States,  seriously  making  such  a  proposition.  Yet 
he  recently  presented  this  to  the  Nebraska  Democratic  conven- 
tion, and  repeated  it  to  this  conference.  This  is  so  contrary  to 
the  spirit  and  traditions  of  democracy,  which  is  usually  opposed 
to  any  trade  restrictions  whatever,  and  so  contrary  to  the  Ameri- 
can idea  of  free  intercourse  between  the  states,  and  so  contrary 
to  Mr.  Bryan's  previous  declarations,  that  one  has  difficulty  in 
taking  him  seriously.  If  this  is  really  the  best  that  his  mind  can 
suggest  on  the  subject,  it  is  a  depressing  gauge  of  his  states- 
manship. It  would  hardly  be  possible  to  invent  a  proposition  that 
would  be  more  fertile  in  creating  corruption,  injustice,  favor- 
itism and  business  demoralization.  A  license  might  be  granted 
by  one  administration  and  refused  by  another,  for  purely  political 
reasons,  which  would  be  equal  to  confiscating  the  property  of  the 
corporation,  since  it  would  destroy  its  business  value.  -There  i? 
not  a  single  aspect  of  this  proposition  which  is  not  surcharged 
with  economic  and  political  iniquity.  It  partakes  neither  of 
economic  sense,  political  wisdom,  fair  statesmanship,  nor  even 
party  shrewdness. 

It  is  not  to  be  assumed,  however,  that  large  corporations  are 
always  wise,  or  good,  or  fair.  They  are  born  of  the  same  spirit  and 
partake  of  the  same  attributes  as  the  small  business  venders. 
Their  main  ambition  is  to  make  profits.  It  is  the  duty  of  the 
state,  therefore,  to  see  to  it  that  the  conditions  shall  be  such  as 
to  make  dishonesty,  unfairness,  oppressive  dealing,  difficult  and 
as  impossible  as  any  other  offenses  against  the  welfare  of  the  com- 
munity. This  cannot  be  accomplished,  however,  by  the  petty 
nagging  and  corruption-creating  license-granting  proposed  by 
Mr.  Bryan.  The  federal  government  if  it  acts  at  all  should  act 
in  exactly  the  other  direction.  It  should  surround  industrial  en- 
terprise with  the  maximum  freedom  and  the  maximum  protec- 
tion to  all,  and  no  uneconomic  privilege  to  any. 

To  this  end  it  might  be  well  for  Congress  to  enact  a  law  em- 
powering the  government  to  grant  national  charters  to  corpo- 
rations, which  should  give  them  the  right  to  do  business  over  the 

284 


entire  territory  of  the  United  States,  against  which  no  state  should 
have  the  right  to  interfere.  This  would  be  economic,  in  that  it 
would  give  the  market  of  the  entire  country  to  every  business 
enterprise.  National  charters  could  have  the  proper  qualifica- 
tions subjecting  the  corporations  to  a  certain  supervision  and 
compelling  annual  reports  to  be  made.  Second,  it  might  also  be 
provided  that  companies  using  a  public  franchise,  like  railroads, 
should  not  be  permitted  to  make  uneconomic  discriminations  in 
their  rates  of  traffic,  that  they  should  be  subject  to  public  ac- 
counting, and  that  all  contracts  with  shippers  should  be  ac- 
cessible to  all  other  shippers.  The  general  influence  of  publicity 
and  inspection  by  the  national  government,  coupled  with  the  cor- 
porations' protection  in  its  right  to  do  business  throughout  the 
United  States,  would  tend  to  create  a  wholesome  influence  around 
corporate  conduct.  While  affording  corporations  the  full  sup- 
port of  the  national  government  in  their  business  rights,  it  would 
free  them  from  the  petty  uneconomic  nagging  of  partisan  legisla- 
tion in  the  different  states.  It  would  carry  out  the  true  idea  of 
protection — that  the  American  market  should  be  open  to  every 
American  producer  and  that  the  interests  of  the  laborers  and  the 
public  is  safeguarded  by  the  national  government;  at  the  same 
time  leaving  the  essential  features  of  business  to  be  determined 
by  the  free  action  of  economic  forces,  which  are  more  perma- 
nent, more  sure  and  more  equitable  than  the  wisest  statutory 
enactment  would  ever  be. 

GEORGE  R.  GAITHER,  JR. 

Attorney-General  of  Maryland. 

The  day's  program  was  closed  by  the  reading  of  a  paper  by 
Attorney-General  George  Gaither,  Jr.,  of  Maryland,  on  "Mary- 
land and  the  Trusts,"  who  said : 

The  phenomenal  growth  of  trusts,  as  the  consolidations  of 
great  business  interests  into  central  corporations  are  currently 
designated,  has  excited  the  deepest  interest  in  the  minds  of  the 
people  of  this  country.  The  meaning  of  this  tremendous  change 
in  the  economic  relations  of  the  nation  is  being  earnestly  con- 
sidered by  every  thinking  citizen^  and  some  effective  remedy  for 
the  evils  which  the  growth  of  this  new  system  threatens  to  pro- 
duce is  eagerly  looked  for.  It  is  peculiarly  fortunate  that  this 
new  problem  has  developed  so  rapidlv  that  it  has  not  as  yet  been 
complicated  by  political  antagonisms,  and  no  partisan  spirit 

285 


should  be  allowed  to  enter  into  the  present  serious  discussion  of 
the  great  question.  The  evils  attendant  upon  the  present  and  the 
threatened  development  of  these  combinations .  in  the  manu- 
facturing, producing  and  transportation  interests  of  the  country 
are  universally  recognized.  For  four  hundred  years  the  Eng- 
lish-speaking races  have  abhorred  monopolies,  and  since  the 
reign  of  the  Tudors  every  bill  of  rights  has  prohibited  the  sov- 
ereign power  from  granting  any  privileges  in  trade  or  commerce 
which  were  in  their  nature  exclusive  and  preventive  of  com- 
petition. There  is  scarcely  a  constitution  of  a  state  of  the  Union 
which  does  not  contain  this  prohibition,  and  in  the  constitution 
of  Maryland  it  is  expressly  stipulated  "that  monopolies  are  odious, 
contrary  to  the  spirit  of  a  free  government  and  the  principles  of 
commerce,  and  ought  not  to  be  suffered."  Abhorrence  of 
monopolies  is  therefore  one  of  the  most  deep-seated  convictions 
of  the  English-speaking  races.  Our  modern  form  of  monopolies 
differs,  however,  most  radically  from  the  form  which  our  an- 
cestors fought  against.  Ancient  monopolies  owed  their  existence 
to  the  exclusive  privileges  with  which  they  had  been  invested  by 
the  royal  prerogative.  Modern  monopolies  or  trusts  claim  no 
protection  from  the  law, — on  the  contrary  they  simply  ask  that 
they  shall  not  be  interfered  with,  relying  upon  the  crushing 
power  of  the  exclusive  privileges,  which  their  own  control  of  great 
aggregations  of  capital  has  obtained,  for  their  flourishing  ex- 
istence. The  old  monopoly  was  a  creature  of  the  law,  the  mod- 
ern trust  seeks  to  establish  itself  without  legislative  assistance, 
and  in  many  instances  in  defiance  of  express  enactments.  It  is 
manifest,  therefore,  that  present  constitutional  prohibitions 
against  monopolies  do  not  touch  the  modern  type  of  these  dan- 
gerous elements  in  the  business  world —  that  a  prohibition  on  the 
sovereign  power  from  creating  an  exclusive  privilege  in  business 
cannot  prevent  such  privileges  from  being  exercised  when  ac- 
quired by  means  independent  of  the  sovereign  itself.  We  must 
consequently  look  for  the  machinery  to  properly  deal  with  these 
new  creations  of  modern  industrial  life  in  new  legislation  ap- 
plicable to  the  new  phenomena,  and  not  in  any  attempt  at  adapt- 
ation of  old  principles  which  were  meant  to  apply  to  practically 
opposite  conditions. 

Before  considering  the  remedial  legislation  which  should  be 
applied  to  these  new  monopolies  in  business,  it  is  of  paramount 
importance  to  determine  whether  the  development  of  those  com- 
binations, in  their  colossal  proportions,  is  due  to  sound  economic 
laws.  Whether  their  growth  is  the  result  of  the  evolution  of 
modern  business  conditions,  or  of  a  mania  for  manipulating  the 

286 


possible  profits  of  a  combination  of  conflicting  interests  so  as  to 
create  an  aggregation  of  fictitious  wealth  and  unload  its  shares 
upon  a  speculative  public.  If  the  latter  view  of  the  origin  of 
trusts  is  correct,  the  country  need  not  concern  itself  much  about 
remedial  legislation.  The  inexorable  law  of  economics  that  values 
must  inevitably  find  their  true  level  can  be  safely  relied  upon  to 
disintegrate  and  destroy  the  false  combinations  which  have  been 
formed,  and  the  creation  of  trusts  may  be  regarded  as  only  a 
temporary  disturbance  of  the  business  world. 

But  is  the  tendency  of  all  economic  undertakings,  under  the 
well  recognized  laws  of  modern  business  affairs,  toward  a  disin- 
tegration of  business  enterprises  into  smaller  establishments,  or 
to  a  concentration  under  greater  and  ever  greater  combinations? 
A  casual  observation  of  the  tendencies  of  business  conditions 
for  the  past  forty  years  must  convince  everyone  of  the  trend  of 
economic  forces,  and  furnish  unanswerable  proofs  of  the  sources 
from  which  our  modern  colossal  combinations  have  flowed.  Be- 
fore the  late  Civil  War  the  tendency  of  the  numerous  small  rail- 
road corporations  throughout  the  country  to  consolidate  into 
larger  companies  was  manifest,  and  these  corporations  have  since 
that  time  been  merged  into  a  few  great  trunk  lines,  which  lines 
by  traffic  agreements  and  pools  have  practically  been  united  in  a 
common  undertaking.  Then,  too,  manufacturing  interests  have 
been  concentrated  and  combined.  Factories  have  been  placed  in 
close  proximity  to  the  raw  material  which  was  to  be  used,  until 
the  great  corporations  engaged  in  producing  the  finished  prod- 
ucts of  industry  have  owned  practically  every  factor  entering 
into  their  business.  So,  too,  the  shoe  manufacturer  and  clothing 
manufacturer  have  sought  through  their  own  stores  to  place  their 
products  in  the  hands  of  the  consumer  without  the  intervention 
of  any  third  parties.  The  consolidation  of  gas  companies,  street 
railways  and  electric  companies  in  our  municipalities,  or  their 
agreement  as  to  price  or  territory  (which  is  practically  the  same 
thing),  are  experiences  with  which  we  have  been  familiar  for 
many  years.  Whilst  the  great  department  stores  which  have 
developed  in  every  city  to  their  present  proportions  have  dem- 
onstrated the  economies  and  conveniences  which  the  public  en- 
joys from  a  concentration  and  consolidation  of  interests.  The 
savings  in  the  cost  of  production  by  the  cutting  down  of  com- 
peting expenditures,  the  economies  of  purchases  in  great  bulk  and 
of  transportation,  are  realized  by  everyone,  and  the  saving  in  the 
cost  of  the  article  to  the  consumer  from  these  new  channels  of 
trade  is  universally  recognized.  Such  has  been  the  tendency  of 
business  methods  for  many  years. 

287 


We  have  viewed  consolidation  and  concentration  in  all  of 
these  manifold  phases  of  industrial  and  commercial  life  for  many 
years  with  complacency,  and  in  most  instances  with  satisfaction. 
It  is  only  when  the  tendency  reaches  the  acute  stage,  and  a  con- 
solidation of  the  great  businesses  which  deal  in  the  necessaries  of 
life,  and  with  the  callings  in  which  we  are  vitally  interested, 
threaten  us  with  a  great  economic  revolution,  that  the  country 
becomes  aware  of  the  dangers  which  are  threatening.  In  the 
first  paroxysm  of  fear  the  cry  is  raised  that  this  tendency  of  mod- 
ern business  life  must  be  checked,  that  these  combinations  must 
be  destroyed,  and  men  must  be  forced  by  legislation  to  return  to 
the  business  methods  and  ways  which  their  intelligence  has  dis- 
carded. As  well  might  we  attempt  to  turn  back  the  forces  of  na- 
ture as  the  forces  of  economic  social  conditions.  It  would  be  as 
reasonable  to  endeavor  by  legislation  to  restore  the  days  of  the 
stage-coach,  or  to  prohibit  electricity  from  usurping  the  sphere 
of  steam.  The  attempt  of  ignorant  bigotry  to  compel  Galileo  to 
recant  his  masterly  exposition  did  not  prevent  the  earth  from 
revolving  about  the  sun.  The  truth  is  rapidly  dawning  upon 
humanity  that  co-operation  is  the  highest  form  of  industrial  activ- 
ity that  civilization  can  develop.  When  this  great  economic 
axiom  is  being  accepted  by  the  capitalists  of  our  nation,  it  is 
imperative  that  the  great  working  masses  should  not  blindly  op- 
pose its  adoption.  Competition  is  no  longer,  the  life  of  trade, 
it  is  a  destroying  force  to  those  engaged  in  it.  Then,  too,  the 
country  should  profit  economically  from  the  great  benefits  which 
these  combinations  and  consolidations  must  confer.  The  favor- 
able conditions  under  which  the  production  of  commodities  will 
take  place  must  minimize  the  cost  price  of  the  finished  article, 
and  enable  the  consumer  to  enjoy  at  least  a  percentage  of  the 
saving.  The  use  of  the  most  approved  machinery,  and  of  the 
most  scientific  methods  which  the  best  intelligence  can  devise, 
necessarily  minimize  the  amount  of  human  labor  which  is  to  be 
expended,  and  at  the  same  time  insure  greater  purity  for  the 
product.  The  stability  of  "business  which  will  be  the  outcome 
of  the  new  order  of  things  will  be  of  lasting  benefit  to  the  country. 
Under  the  competitive  system  men  will  sell  to  firms  of  doubtful 
credit  rather  than  be  deprived  of  business,  and  the  solvent  mer- 
chant is  always  at  the  mercy  of  a  cut  in  prices  by  his  recklessly 
insolvent  neighbor.  Under  the.  new  system  the  thousands  of 
active  country  merchants,  who  cover  every  hamlet  of  our  great 
continent  with  their  wonderful  distributing  facilities,  will  be 
able  to  purchase  their  standard  articles  at  a  uniform  price,  and 
one  which  they  can  reasonably  rely  upon  being  maintained.  The 


advantages  of  such  stability  in  business  to  the  entire  people  will 
in  the  near  future  prove  enormous.  Then,  too,  after  the  fictitious 
capital  in  most  of  these  combinations  has  been  squeezed  out  by 
receiverships  and  reorganizations,  as  must  inevitably  be  the  case 
with  many  of  them,  the  shares  of  these  great  industrial  com- 
binations will  furnish  as  safe  an  investment  for  the  savings  of  the 
people  as  the  standard  railroad  securities  of  the  country  now 
afford.  In  this  way  co-operation  in  the  industrial  enterprises  of 
our  nation  will  be  practically  established,  and  the  grip  of  the  great 
capitalists  upon  every  business  enterprise  will  be,  in  practically 
a  brief  period,  permanently  loosened.  Shall  all  of  these  bene- 
fits be  given  up,  shall  the  attempt  be  made  to  reverse  the  great 
tides  of  industrial  and  commercial  development,  simply  because 
the  American  people  declare  themselves  otherwise  unable  to  avert 
the  evils  which  the  present  system  threatens  to  bring  upon  the 
body  politic?  Shall  we  burn  down  the  house  in  order  to  get  rid 
of  the  vermin  which  infest  it?  Must  we  destroy  all  modern  de- 
velopment by  a  wild  and  relentless  crusade  against  the  existence 
of  these  so-called  trusts?  I  would  readily  admit  that  if  destruc- 
tion was  the  only  remedy  for  the  threatened  evils,  then  those 
evils  are  so  injurious  to  the  great  masses  of  the  people  that  such 
a  radical  remedy  would  be  justifiable,  but  I  do  not  concede  for  a 
moment  that  such  extreme  measures  are  necessary. 

Every  evil  which  is  attendant  upon  the  present  development 
of  trusts  can  be  restricted  and  finally  eliminated  by  wise  legisla- 
tion under  which  the  management  and  development  of  these 
corporations  can  be  controlled  and  directed.  The  control  and 
direction  of  such  corporations  can  be  affected  with  absolute  cer- 
tainty. The  giant  of  capitalistic  greed  has  bound  himself  with 
thongs  which  cannot  be  loosened,  the  genius  of  monopoly  has 
placed  itself  in  the  bottle  which  has  been  tightly  sealed.  Experi- 
ence has  shown  that  old  forms  of  trust,  such  as  the  Standard  Oil 
trust  originally  was,  cannot  exist  for  an  indefinite  period  in  an  in- 
corporeal stage,  that  pools  and  agreements  are  not  sufficiently 
binding  or  legal  to  be  effective.  The  modern  form  of  combina- 
tions for  every  purpose  is  therefore  the  corporation.  Such  a  form 
is  the  only  legal  one,  and  in  the  form  of  a  corporation  nothing  is 
easier  than  control  by  the  law.  A  defiance  of  the  creator  by  its 
creature,  the  corporation,  can  be  followed  with  such  penalties  of 
forfeiture  and  confiscation  that  every  act  of  the  trust  can  be  ascer- 
tained and  directed  by  the  law,  and  every  officer  compelled  to  do 
his  duty.  It  is  only  necessary  to  have  an  enactment  of  a  law  by 
a  competent  body  to  compel  its  observance  by  the  corporation, 
and  such  has  been  the  result  of  legislation  in  restraint  of  corporate 

289 


action  even  in  this  period  when  corporate  wealth  is  so  arrogant 
and  aggressive.    The  manner  of  obtaining  that  competent  author- 
ity will  be  discussed  later,  its  use  is  now  referred  to.     By  this 
legal  control  and  direction  all  of  the  evils  of  trusts  can  be  suc- 
cessfully eliminated.     The  evil  tendencies  of  these  consolidations 
may  be  considered  under  three  heads :  First,  an  unreasonable  and 
excessive  increase  of  the  price  of  the  article  or  service,  due  to  the 
stifling  of  competition;  secondly,  a  wholesale  discharge  of  em- 
ployees, whereby  the  opportunities  of  mankind  to  earn  a  liveli- 
hood are  seriously  diminished,  and,  thirdly,  a  fictitious  creation  of 
capital  values  whereby  the  public  are  victimized.     First  as  to  the 
excessive  price.     The  propriety  of  a  law  regulating  the  price  to  be 
charged  for  a  commodity  or  a  service,  controlled  by  a  trust,  can- 
not be  questioned.     For  half  a  century  the  courts  of  this  country 
have  been  upholding  the  right  of  legislatures  to  regulate  the  rea- 
sonable charges  of  railroad  and  express  companies,  and  of  gas, 
water,  electric  light  and  street  railway  corporations.     It  is  true 
that  this  right  has  been  sustained  on  the  ground  that  these  ser- 
vices so  regulated  were  of  a  quasi-public  nature,  but  although  this 
is  the  theory  of  the  law,  the  basic  principle  is  that  the  people  are 
at  a  disadvantage  in  dealing  with  the  corporation,  because  thev 
must  employ  the  company  (it  having  practically  a  monopoly) 
or  go  without  the  service,  and  therefore  the  sovereign  power  steps 
in  and  makes  a  just  regulation  for  their  protection.     It  must  be 
remembered  that  this  advance  has  been  made  by  the  courts  under 
existing  constitutions  and  under  present  theories  of  industrial 
relations.     Assuredly  if  it  is  just  and  proper  that  the  citizen 
should  be  protected  in  the  price  that  he  should  pay  for  the  gas  or 
water  which  he  consumes,  or  for  his  transportation  on  the  street 
car  or  railroad,  how  much  more  imperative  that  he  should  not  be 
required  to  pay  an  exorbitant  price  for  the  sugar,  beef  or  flour 
which  his  family  consumes,  or  for  the  fuel  or  clothing  which  they 
require.     This  regulation  of  prices  should  be  intrusted  by  Con- 
gress to  commissions  for  each  industry  to  be  regulated,  and  such 
commissions  should  be  selected  from  the  skilled  and  trained  em- 
ployees in  the  several  businesses  or  vocations,  who  have  been  de- 
prived of  employment  by  the  consolidation  of  enterprises.     Sec- 
ondly, as  to  the  discharge  by  corporations  of  a  trust  character  of  a 
number  of  its  employees.     Under  the  power  to  control  and  direct 
it  would  be  within  the  province  of  Congress  or  of  the  states  to 
vastly  ameliorate  the  present  semi-barbaric  relationship  between 
great  corporations  and  their  employees.     If  the  resources  and  the 
conditions  of  the  corporation  should  warrant  it,  the  hours  of  labor 
might  be  shortened  in  a  particular  trade  or  business  and  thereby 

290 


the  number  to  be  employed  increased.  Then  again  an  inspection 
of  the  goods  furnished,  or  the  service  rendered,  so  as  to  insure 
their  quality  and  adequacy  would  be  a  source  of  employment  for  a 
number  of  those  who  have  had  experience  in  the  particular  indus- 
try. Moreover,  a  system  of  compulsory  arbitration  could  be 
established,  whereby  the  unfortunate  strikes,  which  have  been  in 
the  main  most  prejudicial  to  the  common  interests  of  employer 
and  employee,  might  be  permanently  avoided.  And  again,  by  a 
wise  system  of  taxation,  levied  upon  these  new  great  aggregations 
of  wealth,  a  sufficient  fund  could  be  secured  by  the  nation,  and  the 
municipalities,  to  establish  channels  of  public  enterprise  in  which 
everyone  deprived  of  employment  by  the  ever-changing  condi- 
tions of  the  economic  world  could  secure  temporary  employment 
until  a  footing  could  be  obtained  in  another  branch  of  industry. 
As  to  the  remaining  evil,  that  of  overcapitalization,  taxation  and 
the  weakness  inherent  in  its  organization  would  in  a  compara- 
tively short  time  eliminate  the  inflation,  or  as  it  is  now  termed, 
liquid  capital,  and  through  receiverships  and  reorganizations  this 
fault  eventually  would  be  cured.  Through  these  methods,  sim- 
ply offered  as  suggestions,  and  which  in  practice  would  .probably 
be  vastly  amended  from  the  imperfect  outlines  which  have  been 
set  forth,  the  system  of  trusts  or  combinations  could  be  relieved 
from  all  the  dangers  which  are  now  apparent.  There  may  be 
other  deleterious  tendencies,  but  if  so  they  are  of  a  minor  char- 
acter, and  can  be  successfully  regulated  and  controlled. 

We  have  so  far  considered  the  method  of  dealing  with  com- 
binations or  trusts  which  would  appear  to  be  most  efficacious ;  the 
remaining  question  is  as  to  the  machinery  by  which  the  necessary 
control  and  direction  of  trusts  can  be  made  effective.  The  con- 
trol, regulation  and  direction  of  all  trusts,  whose  business  either 
directly  or  indirectly  is  carried  on  in  more  than  one  state,  should 
be  placed  under  the  jurisdiction  of  Congress.  A  similar  jurisdic- 
tion over  such  combinations  operating  in  a  single  state  should  be 
reposed  in  the  respective  State  Legislatures.  It  would  be  almost 
suicidal  to  attempt  such  legislation  under  the  present  constitu- 
tional limitations  both  of  the  nation  and  the  states.  Let  us  cut 
the  Gordian  knot  of  endless  constitutional  discussion  by  adopting 
immediately  an  amendment  to  the  federal  Constitution  which  will 
confer  the  broadest  power  to  deal  with  the  subject  upon  Congress 
and  the  states  in  their  respective  spheres.  The  decisions  of  the 
Supreme  Court  in  the  Sugar  Trust  case,  and  in  other  cases, 
demonstrate  the  inability  of  the  federal  government  to  deal  with 
the  subject  under  the  powers  conferred  by  the  interstate  com- 
merce clause  of  the  Constitution.  Every  lawyer  is  familiar  with 

291 


the  tendency  of  the  court  to  destroy  the  effect  of  all  state  legisla- 
tion affecting  business  or  commerce  between  the  states,  by  invok- 
ing the  force  of  this  same  interstate  commerce  section.  To  allow 
this  most  momentous  subject,  under  either  federal  or  state  legisla- 
tion, to  be  the  victim  of  narrow  legal  construction  or  baffling 
technicalities,  or  to  be  robbed  of  its  efficacy  by  conflicting  deci- 
sions of  numerous  state  and  federal  courts,  would  be  a  blunder 
worse  than  the  crimes  which  might  be  perpetrated  under  the 
trust  system.  The  amendment  should  be  couched  in  the  most 
comprehensive  terms.  It  should  expressly  confer  adequate  pow- 
ers upon  the  states  to  legislate  concerning  trusts  operating  wholly 
within  their  borders,  so  that  there  may  be  no  restraint  upon  state 
action  on  account  of  restraints  imposed  upon  the  states  in  certain 
clauses  of  the  Constitution  as  it  now  stands.  Then,  too,  the  con- 
stitution of  the  state  should  be  amended  wherever  there  is  any 
doubt  as  to  present  powers  being  adequate.  This  latter  step  is 
not  so  necessary  at  the  present  moment  as  the  amendment  to  the 
national  document.  The  proposed  amendment  should  be  passed 
by  the  present  Congress  at  its  first  session.  Then  it  can  be  sub- 
mitted to  the  State  Legislatures  to  be  chosen  in  the  year  1900,  and 
in  the  present  attitude  of  both  parties  to  the  subject  should  re- 
ceive the  approbation  of  the  necessary  three-fourths  vote  before 
the  meeting  of  the  Congress  which  will  be  elected  at  the  coming 
presidential  election.  That  Congress  should  be  composed  of  men 
who  will  be  ready  and  willing  ty  take  up  the  necessary  legislation 
to  make  the  control,  regulation  and  direction  of  these  combina- 
tions a  lasting  benefit  to  the  entire  people. 

With  this  plan  our  beloved  country  can  commence  the  twen- 
tieth century  with  a  hope  of  a  triumphant  solution  of  the  greatest 
of  industrial  problems.  It  is  idle  to  attempt  to  forecast  the  ulti- 
mate results.  The  dreams  of  socialism  may  be  realized,  or  co- 
operation may  work  out  the  destinies  of  mankind  in  an  industrial 
and  social  republic  differing  widely  from  the  fancies  of  imagina- 
tion. But  whatever  may  be  the  outcome,  the  substitution  of  the 
control  of  the  people  for  the  control  of  the  trusts  will  make  the 
future  of  the  nation  under  the  guidance  of  intelligence  and  lofty 
purpose  forever  secure. 


292 


JAMES  E,  WEAVEE. 

Professor  of  Political  Economy,  Lte  Pamv  University. 

By  economic  limitations  is  meant  all  such  checks  or  restric- 
tions that  a  sound,  enlightened  study  of  economics  should  bring 
to  bear  upon  trusts,  to  prevent  them  from  becoming  social  evils, 
by  appealing  to  the  self-interest  of  the  parties  or  corporations 
combined.  By  way  of  introduction,  and  to  a  clearer  understand- 
ing of  the  subject,  it  should  be  borne  in  mind  that  all  trusts, 
whether  of  labor  or  capital,  possess  two  distinct  sides  or  phases : 
First,  that  of  co-operation,  recognized  as  a  natural  right,  only 
to  be  restricted  when  clearly  detrimental  to  the  welfare  of  society. 
This  is  its  beneficent  side.  It  stands  over  against  excessive  com- 
petition, being  the  corrective  to  destructive  competition,  hence 
is  fundamental  and  deserves  our  highest  praise;  but,  like  all  good 
things,  when  carried  too  far,  it  becomes  an  evil,  taking  on  the 
form  of  monopoly,  which  not  only  regulates  competition,  but 
practically  destroys  it.  It  now  in  turn  becomes  injurious  to 
society,  if  not  limited  to  its  proper  functions.  Possessed  of 
despotic  power,  the  monopolistic  trust  may  become  the  source 
of  great  social  evil.  It  may  strive  to  levy  tribute  on  smaller  indus- 
trialists and  consumers,  much  as  did  the  feudal  lords  upon  their 
serfs  during  the  Middle  Ages.  This  phase  justly  arouses  social 
apprehensions,  and  merits  our  condemnation.  The  only  or  chief 
difference  between  capitalistic  and  labor  trusts  is  one  of  power; 
but  small  despotisms  may  be  as  galling  as  great  ones,  as  fre- 
quently revealed  by  labor  organizations. 

To  distinguish  in  practice  between  the  good  and  evil  phases 
of  trusts  is  not  an  easy  task.  To  find  a  solution  or  remedy  for 
the  monopolistic  phase,  even  when  distinguished,  may  well  baffle 
human  ingenuity,  from  the  fact  that  it  depends  so  .largely  upon 
conditions  and  limitations,  and  frequently  upon  a  hidden  pur- 
pose of  those  combining.  Hitherto,  all  social  appliances  have 
fallen  short  of  the  demands  of  society  to  regulate  monopolistic 
trusts,  and  this  conference  witnesses  with  great  emphasis  the 
general  unrest  in  regard  to  the  recent  manifestations  and  expan- 
sion of  trusts  in  general.  Again,  as  trusts  are  competitive  as  well 
as  monopolistic,  it  is  rather  of  the  former  that  this  paper  seeks 
to  deal,  since  the  latter  can  often,  at  least  for  a  time,  violate  the 
laws  of  political  economy  without  suffering  the  penalty  of  such 
violation.  Hence  while  monopolistic  trusts  must  generally  be 
more  rigorously  controlled  or  even  prohibited  by  law,  competi- 
tive trusts  may  be  generally  sufficiently  restricted  by  the  opera- 


293 


tion  of  economic  laws.     This  latter  phase  is  especially  consid- 
ered. 

Like  all  social  questions,  the  elements  of  the  trust  are  so 
multiform  as  to  preclude  the  hope  of  ever  discovering  any  single 
satisfactory  remedy.  Doubtless  the  solution  must  he  as  complex 
as  the  evil  to  be  remedied;  that  is  to  say,  while  rational  economics 
and  ethics  must'in  the  end  prevail,  legislation  and  public  opinion 
must  frequently  enforce  their  behests.  But  great  caution  should 
be  used  in  the  exercise  of  legal  restrictions,  lest  individual  initia- 
tive be  crippled  and  discouraged,  resulting  in  a  serious  check  to 
our  present  industrial  progress.  Hence  I  firmly  believe  that  the 
economic  checks  should  be  primary  and  fundamental,  since  these 
appeal  directly  to  the  self-interests  of  the  trusts  themselves,  and 
as  yet  neither  science  nor  art  nor  philosophy  has  found  a  sub- 
stitute for  that  original  incentive  to  human  industry,  viz.,  self- 
interest. 

But  what  can  reasonably  be  hoped  from  the  application  of  the 
soundest  principles  of  economics  in  regard  to  trusts?  Much,  I 
affirm;  though  doubtless  not  eve^thing  desired,  and  to  formu- 
late these  is  my  self-imposed  task.  The  principal  dangers  from 
trusts  and  especially  from  those  in  which  competition  is  still  pos- 
sible, which  I  denominate  competitive  or  semi-monopolistic  trusts 
for  which  we  seek  a  remedy,  may  be  categoried  briefly  under  four 
heads:  But  in  noting  them  in  order,  and  proposing  certain 
checks  thereto,  space  permits  only  the  broadest-  generalizations, 
mere  suggestions  without  specific  statistical  or  other  satisfactory 
proofs,  to  supply  which  everyone  must  test  them  for  himself  by 
means  of  his  best  philosophy  and  experience,  supported  by  the 
most  reliable  statistical  data  available. 

The  first  one  to  be  mentioned  is  that  these  colossal  organiza- 
tions have  created  a  great  displacement  of  labor,  that  is  by  these 
combinations  many  employees  have  been  thrown  out  of  employ- 
ment, which  is  undoubtedly  true;  for  while  some  expansion  of 
labor  may  follow,  for  the  present  many  are  stranded  by  being 
dropped  from  the  pay-rolls  of  the  absorbed  firms,  being  no  longer 
needed.  Here  economics  affords  relatively  but  little  consolation, 
for  no  effective  arguments  can  be  given  for  the  employment  of 
useless  labor,  just  as  when  the  skilled  artisan  finds  himself  sup- 
planted by  an  ingenious  labor-saving  machine.  We  certainly  pity 
him  in  his  sacrifice  for  the  welfare  of  society,  but  the  machine 
must  neither  be  boycotted  nor  destroyed.  In  like  manner,  when 
in  consequence  of  the  better  organization  of  productive  agencies, 
middle-men  and  commercial  travelers  are  dropped,  and  thousand? 
of  small  entrepreneurs  are  subordinated  to  the  powerful  cen- 

294 


trahzed  combination,  great  sympathy  is  felt  for  the  suffering,  but 
progress  must  not  be  stayed,  even  if  some  sacrifice  attend  the 
process.  However,  even  here  one  check  against  the  arbitrary 
actions  of  the  trusts  is  found,  in  the  fact  that  if  these  capable 
men  be  unjustly  treated,  or  not  somehow  provided  for,  to  the  limit 
of  the  possible,  dangerous  competitive  rivals  are  sure  to  spring 
up,  detrimental  to  the  prosperity  of  the  trust,  on  the  general  prin- 
ciple that  only  by  distributing  power  can  power  be  accumulated; 
hence  these  higher  organizations  dare  not  unduly  subordinate 
the  elements  out  of  which  they  are  composed,  as  injurious  com- 
petition  would  arise,  to  meet  which  would  be  more  expensive 
than  considerate  treatment. 

The  second  danger  from  trusts  is  financial,  viz.,  overcapital- 
ization. This  is  so  manifest,  however,  that  it  may  in  the  main 
be  left  to  individual  correctives.  The  undue  confidence  of  in- 
vestors, and  especially  those  of  small  means,  may  permit  specula- 
tors to  unload  upon  innocent  parties  much  inflated  or  watered 
stock.  Then  later  the  business  is  wrecked,  sometimes  purposely, 
not  only  to  the  destruction  of  the  victims,  but  to  the  creating 
of  a  general  mistrust  that  may  lead  to  a  general  financial  crisis. 
Still  it  must  be  said  that  trusts  are  no  more  likely  than  many 
other  forms  of  speculation  to  deceive  the  unwary;  and  the  public, 
particularly  banking  institutions,  are  so  keenly  alive  to  this  dan- 
ger that  being  forewarned  is  forearmed.  A  wise  precaution 
against  over-speculation  is  one  of  the  elementary  tenets  of  eco- 
nomics. If  this  self-interest  be  supplemented  by  due  publicity, 
but  little,  if  any,  social  damage  would  likely  follow  from  overcapi- 
talization of  trusts.  At  any  rate,  such  danger  is  not  confined  to 
trusts,  but  exists  as  well  in  all  corporations,  partnerships,  and 
even  individual  enterprises.  That  is,  overcapitalization  is  not 
confined  to  trusts,  and  ordinary  care  or  economic  provisions 
should  be  sufficient  protection  against  abuses,  but  if  not,  where 
legislative  regulation  can  avail,  the  latter  should  be  employed. 

But  the  third  danger  from  the  modern  trust  which  is  upper- 
most in  the  minds  of  all  is  generally  regarded  as  the  danger  par 
excellence,  for  this  threatens  our  entire  industrial  regime.  It 
concerns  every  consumer,  for,  if  true,  it  enhances  the  price  of 
his  morning  meal  and  his  lamplight  by  night.  It  has  become  the 
nightmare  of  politicians,  thrusting  upon  them  the  greatest  of 
all  political  issues.  This  threatening  danger  is  formulated  in 
the  question  as  to  its  effect  upon  prices  and  the  rate  of  wages. 
It  would  seem  that  here  we  have  the  crux  of  the  whole  matter. 
If  political  science  and  organic  society  are  incapable  of  furnish- 
ing an  answer  to  this  question,  and  supplying  a  remedy  for  the 

295 


supposed  evil,  both  are  doomed  from  imbecility  in  the  hour  of 
great  need.  Here  is  where  we  need  light  rather  than  heat,  for 
practical  experience  has  by  no  means  answered  in  the  affirmative 
this  query  as  to  the  injurious  effect  on  prices  and  wages.  In- 
vestigation, if  possible,  must  yet  supply  the  practical  data  to  test 
economic  law  in  respect  thereto.  Fortunately,  however,  as  we 
believe,  economic  theory  permits  us  to  prognosticate,  viz.,  that 
a  potent  check  is  found  in  the  self-interest  of  the  trusts  them- 
selves against  inflating  prices  or  lowering  wages,  but  that  the 
opposite  tendency  should  be  found  in  any  rational  and  wisely 
administered  trust  or  combination.  This  conclusion  follows 
from  the  two  following  considerations.  Briefly  stated,  they  are : 
First,  any  undue  advantage  taken  of  the  consumer  by  the  superior 
power  of  the  trusts  is  bound  sooner  or  later  to  react  upon  them 
detrimentally,  and,  if  not  corrected,  will  finally  overthrow  them 
totally.  It  can  hardly  be  questioned  that  trusts  steady  market 
prices,  thus  preventing  ruinous  fluctuations  and  possibly  crises 
greatly  destructive  of  our  industrial  well  being,  and  it  is  gener- 
ally realized  by  the  trusts  themselves,  with  but  few  exceptions, 
probably,  that  a  safe  business  must  be  conducted  rationally  and 
in  conformity  with  the  best  principles  of  legitimate  trade. 
Therefore,  we  should  expect  that  the  folly  of  raising  prices 
which  would  react  against  their  prosperity  could  only  be  tem- 
porary or  exceptional.  Further,  the  reduction  of  expenses  by 
these  combinations  is  very  evident.  In  most  instances  this  has 
been  the  producing  cause.  .Competition,  by  becoming  so  sharp 
as  to  be  almost  destructive,  demands  co-operation  as  a  corrective. 
This  is  the  highest  manifestation  of  the  trust.  The  two  poles 
of  industrial  activity  are  fair  competition  and  free  co-operation. 
These  must  mutually  check  each  other  if  a  wise  harmony  prevails. 

It  must  not  be  forgotten  that  the  chief  elements  of  effective 
competition  are  complete  knowledge  and  perfect  mobility  of  the 
competing  factors,  and  that  although  labor  may  not  possess  these 
two  elements  equally  with  capital,  that  small  capitalists  usually 
possess  them  with  great  capitalists;  hence  the  effect  of  capital- 
istic competition  is  always  powerful  if  not  absolutely  perfect, 
and  should  result  in  securing  equal  returns  to  last  increment  of 
energy  employed,  that  trusts  are  largely  combination  of  capital 
to  reduce  the  sharp  competition  of  capital,  that  the  conflict  is 
between  capitalists,  rather  than  between  capital  and  labor. 

But  even  when  trusts  take  on  their  monopolistic  or  semi- 
monopolistic  form,  they  must  conform  still  under  general  con- 
ditions to  the  laws  of  trade.  To  do  this  they  must  offer  to  society, 
the  consuming  public,  at  least  a  portion  of  their  profits,  and  for 

296 


JAMES  B.  DILL 

J.  G.  SCHONFARBER 

EDWARD  P.  RIPLEY 


EDWARD  ROSEWATER 
JOHN  BATES  CLARK 
M.  L.  LOCKWOOD 


very  good  reasons.  Their  success  depends  generally  on  the 
magnitude  of  consumption,  and  any  unfair  treatment  of  the  pub- 
lic would  arouse  such  resentment  that  patronage  would  neces- 
sarily be  lost.  This  can  be  done  by  refusing  to  buy,  and  further 
by  boycotting  the  product  of  the  offending  trust,  wherever  found. 
Even  trusts  must  court  public  favor  by  offering  a, better  and  a 
cheaper  article,  and  this  they  can  do  best  through  the  magnitude 
of  their  production  and  the  superiority  of  their  appliances.  Now, 
as  trusts,  as  a  rule,  are  dependent  on  increased  rather  than  dimin- 
ished consumption,  public  opinion  can  whip  them  into  line  should 
they  demand  too  high  a  price  for  their  products,  to  the  end 
that  the  legitimate  outcome  of  the  trusts  must  be  lower  rather 
than  higher  prices.  The  same  argument  may  be  applied  to  wages. 

But,  secondly,  in  case  the  consumer  cannot  influence  the  trust 
in  this  manner,  there  is  another  economic  factor  that  rarely  fails 
in  accomplishing  the  same  end,  and  I  believe  facts  will  always  bear 
out  this  position,  if  carefully  examined.  This  corrective  may  be 
dominated  technically  the  potential  competition  of  capital,  and 
it  is  a  well-known  fact  that  at  present  a  great  mass  of  idle  capital 
exists  in  the  hands  of  enterprising  men  ready  to  enter  any  spe- 
cific field  of  production,  whenever  the  profits  of  that  industry 
offer  sufficient  inducement.  So  that,  to  avoid  this  new  compe- 
tition, prices  must  be  lowered  or  profits  shared  with  the  consumer. 
True,  their  gains  may  be  for  a  time  concealed,  but  in  these  days 
of  enterprise  and  publicity  that  is  next  to  impossible.  There- 
fore, are  we  not  justified  in  concluding  that  economic  law  of  itself 
supplies  at  least  these  two  potent  checks  against  any  material 
permanent  rise  of  prices  by  the  trusts?  Where  freedom  to  enter 
any  industry  is  full  and  free,  and  where  monopolistic  franchises 
have  not  been  foolishly  or  fraudulently  granted,  which  is  be- 
coming less  now  every  day,  individual  initiative  and  competi- 
tion may  be  largely  trusted  to  counteract  any  tendency  to  raise 
prices,  but  must  in  the  very  nature  of  the  case  force  them  to  the 
lowest  practicable  point.  The  same  law  would  hold  in  respect 
to  wages.  But  here,  moreover,  the  combinations  of  labor  and 
the  higher  standard  of  living  reinforc'es  the  other  tendencies. 

An  additional  danger  may  be  mentioned,  though  variously 
regarded  by  its  advocates  and  enemies,  viz.,  that  trusts  are  a  long 
step  toward  state  socialism.  It  would  seem  an  easy  matter  to 
reassure  those  who  fear  the  socialistic  tendencies  of  trusts.  They 
rather,  if  anything,  lead  in  the  opposite  direction,  viz.,  to  anarchy, 
the  extreme  antithesis  of  socialism.  Should  trusts  finally  be- 
come so  politically  powerful  as  to  take  the  government  by  the 


297 


throat,  then  the  masses,  in  the  absence  of  any  other  remedy, 
should  revolt,  and  hring  about  a  social  revolution.  Still,  we 
are  rather  upon  the  eve  of  a  social  evolution  than  revolution, 
for  never  in  the  history  of  the  world  has  the  common  man  counted 
for  so  much  in  politics.  No,  they  need  not  resort  to  revolution, 
but  wisely  and  conservatively  operate  through  economic  compe- 
tition and  combination,  and  finally  through  legislation,  to  secure 
any  wise  and  needed  reform.  Again,  the  advocates  of  socialism 
should  readily  understand  the  difference  between  the  trusts  and 
the  socialistic  state.  Their  purposes  are  diametrically  antago- 
nistic; for  one  is  individualistic,  or  co-operatively  individualistic, 
based  upon  the  egoism  of  human  nature,  while  the  other  is  altru- 
istic, based  on  the  sacrifice  of  self.  Hence,  what  under  pres- 
ent competitive  individualistic  conditions  proves  a  success 
for  the  trust,  which  is  a  co-operation  of  the  most  capable  organiz- 
ers, the  great  captains  or  leaders  of  industry,  limited  in  num- 
ber, so  that  unity  of  purpose  can  bs  preserved,  and  all  for  their 
personal  gain,  why  sfiould  these  not  succeed?  But  contrast 
with  this  the  socialistic  program,  even  the  highest  and  most 
ideal,  where  is  any  ground  of  hope  for  success  from  any  analogy? 
Socialism  must  organize  the  whole  mass,  capables  and  incapables 
alike,  and  not  for  the  welfare  of  self,  but  of  the  whole.  Beauti- 
ful ideal,  certainly,  but  too  angelic  for  this  world  of  human  pas- 
sions and  selfish  hearts.  Is  it  too  much  to  affirm  that  any  rational 
comprehension  of  the  fundamental  principles  of  political  econ- 
omy scientifically  based  on  human  nature  as  we  find  it,  must 
preclude  both  the  fears  of  the  enemies  and  the  hopes  of  the  friends 
of  state  socialism?  That  is,  no  logical  analogue  is  found  in  the 
trust. 

Still,  while  these  various  checks  upon  the  trust  have  been 
emphasized,  we  dare  not  conclude  that  all  men,  or  even  the 
majority  of  them,  are  subject  to  such  checks,  for  all  do  not  act 
rationally  or  even  wisely  for  their  own  self  interest,  much  less 
the  common  good.  Until  men  are  controlled  from  within,  they 
must  be  regulated  from  without.  Hence,  legal  compulsion  must 
reinforce  public  opinion  based  on  economic  and  ethical  law.  Legis- 
lation, therefore,  must  not  abdicate  its  function,  but  at  the 
proper  moment  and  in  the  wisest  manner  see  to  it  that  trusts, 
like  any  other  agencies — yea,  more  so,  on  account  of  the  power 
they  yield — are  not  permitted  to  sacrifice  public  welfare;  that 
is,  place  themselves  beyond  the  laws  of  political  economy.  Some 
propositions  are  self-evident  here;  all  trusts  made  monopolistic 
by  franchises  or  public  favor  should  be  destroyed  by  being  na- 
tionalized or  otherwise;  freedom  of  cpmpetition  must  be  guar- 

298 


anteed,  hence  all  other  trusts  may  be  regulated  by  publicity  and 
taxation.  The  great  difficulty,  however,  is  not  so  much  in  the 
form  of  the  combination  as  in  the  mass  of  the  capital.  This 
mass  may  be  even  more  detrimental  to  society  by  being  in  the 
hands  of  one  individual.  Then  what?  Must  we  check  indi- 
vidual power  by  limiting  the  amount  of  capital  in  any  one  enter- 
prise, whether  in  corporate  or  individual  hands?  We  are  not 
ready  for  this  yet,  but  as  trusts  are  in  the  line  of  economic  prog- 
ress, how  is  it  possible  to  check  them  other  than  by  legal  restric- 
tions as  to  amount  of  capital,  as  well  as  by  publicity,  etc.  ? 

But  I  would  first  exhaust  the  economic  checks  before  resort- 
ing to  legislative  authority;  would  plead  for  individual  liberty, 
limited,  of  course,  by  the  higher  rights  of  society ;  I  would  strive 
to  educate  morally  and  economically  before  calling  in  the  ex- 
treme rigor  of  the  law.  For  these  reasons  personally  I  am  still 
optimistic,  even  in  regard  to  the  trusts,  believing  that  the  eco- 
nomic checks  here  briefly  suggested  cannot  fail  to  operate  sub- 
stantially upon  a  wisely  educated  body  of  industrial  organizers ; 
for  if  this  can  be  made  effectual,  we  save  untrammeled  individual 
initiative,  that  mainspring  of  progress,  that  God-given  lever  to 
push  the  race  onward  in  the  path  of  civilization.  Let  us,  there- 
fore^  only  regulate  and  rationalize,  and  not  destroy  the  trust 
when  not  monopolistic.  But  if  these  economic  checks  fail,  then, 
for  the  time  being,  force  must  reinforce  moral  suasion,  and  the 
highest  principles  of  self-interest  for  society  must  be  saved.  It 
is  not  the  function  of  this  paper  to  point  out  the  specific  method 
of  legal  restriction,  but  leave  that  to  the  conservative  wisdom  of 
statesmen  and  other  members  of  this'conference  to  formulate. 

W.  P.  POTTEE. 

Member  of  Pennsylvania  Bar. 

In  order  to  understand  the  present  situation,  it  is  necessary 
to  look  back  a  little.  During  the  period  of  time  extending  from 
1892  to  1898,  the  business  community  throughout  this  entire 
country  was  suffering  as  it  had  never  suffered  before,  from  what 
seemed  to  be  chronic  overproduction. 

The  result  of  this  was  to  bring  about  excessive  competition 
in  all  lines  of  business.  In  the  anxiety  to  find  purchasers,  prices 
were  cut  below  the  limits  of  reasonable  remuneration.  This  evil 
of  excessive  competition  seemed  to  prevail  everywhere.  Dis- 
couragement marked  every  department  of  trade.  In  the  effort 
to  obtain  relief  the  wages  of  labor  were  reduced.  This  only  led 

299 


to  additional  complications.  The  workingmen  strove  by  the  only 
means  at  their  command.,  to  save  themselves,  and  strikes  and 
lockouts  were  instituted,  with  the  usual  distressful  accompani- 
ments. 

The  only  effective  means  of  overcoming  this  condition  seemed 
to  be  the  obvious  one  of  an  understanding  among  the  producers 
in  various  lines,  as  to  the  prices  to  be  asked  for  their  commodi- 
ties. 

Eegulation  in  this  respect  was  possible  only  through  a  union 
of  interests  upon  the  part  of  those  engaged  in  the  same  line  of 
business.  Ordinary  trade  agreements  were  hard  to  enforce,  and 
were  readily  disregarded  in  the  effort  to  obtain  business. 

Naturally  the  next  step,  in  the  effort  to  regulate  production, 
and  sustain  prices  at  reasonable  levels,  was  to  combine  the  hold- 
ings of  the  various  parties  interested,  and  concentrate  the  capital 
engaged,  so  far  as  might  be  feasible,  into  one  corporation.  No 
reasonable  objection  could  be  made  to  this  action,  for  the  uniting 
of  different  properties  under  one  management,  and  under  one 
control,  upon  a  fair  valuation,  could  not  be  harmful  to  the  gen- 
eral public. 

In  this  connection  I  desire  to  say  that  during  the  progress  of 
this  whole  movement,  the  result  of  trade  combinations  has  thus 
far  not  shown  in  a  single  case  that  the  operation  has  been  preju- 
dicial to  the  rights  of  the  public. 

It  is  but  the  statement  of  a  simple  fact  to  say*that  the  present 
tendency  toward  combination  and  co-operation  is  the  reaction 
from  the  keen  and  excessive  competition  of  the  past  few  years. 
Whether  this  movement  for  co-operation  is  justifiable  or  not, 
depends  upon  the  facts  in  the  case.  Whether  for  good  or  evil 
is  to  be  determined  by  an  examination  of  the  results.  "By  their 
fruits  ye  shall  know  them,"  and  in  arriving  at  a  conclusion,  calm 
and  careful  consideration  is  called  for,  and  the  subject  should 
be  approached  in  a  spirit  of  fairness,  and  not  in  bitterness  or 
with  blind  denunciation.  An  impulse  so  general,  and  so  wide- 
spread in  the  business  world,  must  have  cause  for  its  existence. 

The  rights  of  the  public  are  not  to  be  ignored  in  any  event; 
but  so  long  as  these  rights  are  respected,  the  individual  is  cer- 
tainly at  liberty  to  concentrate  his  capital  and  combine  his  re- 
sources with  his  fellows  in  the  same  line  of  business  for  their 
mutual  benefit. 

The  demand  for  commodities  of  all  kinds  at  the  present  time 
is  greatly  in  excess  of  what  it  has  ever  been,  and  it  is  required, 
too,  that  they  be  furnished  more  cheaply  than  ever  before.  Ex- 
perience has  shown  that  these  demands  can  be  met  only  by  the 

300 


employment  of  large  capital,  and  upon  a  most  extensive  scale  of 
working. 

Civilization  has  advanced,  and  a  comfortable  scale  of  living 
has  been  brought  within  reach  of  the  average  man,  just  in  pro- 
portion to  the  development  of  business  along  these  lines  of  co- 
operation and  combination.  First,  it  was  the  individual  working 
by  himself  in  his  particular  line.  Then  came  the  union  of  two  or 
more  individuals  into  a  partnership.  This  was  followed  by  the 
formation  of  the  small  corporation,  and  from  that  grew  the  larger 
corporation,  and  the  last  and  present  stage  of  development  is  the 
union  or  partnership  of  the  smaller  corporations,  into  the  grand 
aggregation,  often  miscalled  a  trust. 

As  a  matter  of  fact  most  of  the  business  combinations  of  the 
day  are  not  trusts  at  all.  They  are  simply  large  corporations. 
The  so-called  ''anti-trust"  attacks' are  not  really  attacks  upon 
trusts,  for  the  reason,  that  but  very  few  real  trusts  are  in  exist- 
ence in  this  country.  The  hue  and  cry  that  has  been  raised  is 
really  an  attack  upon  large  corporations.  If  the  people  of  this 
country  are  determined  to  wipe  out  all  corporations,  of  course 
they  can  do  so.  No  one  would  claim,  however,  that  such  an  ex- 
treme measure  is  desired  by  anyone  who  has  the  prosperity  of  the 
country  at  heart.  Such  action  would  be  to  turn  backward  the 
hands  upon  the  dial  of  human  progress,  and  90  per  cent  of  the 
country's  industries  would  stop. 

To  the  community  as  a  whole,  large  corporations  are  neither 
injurious  nor  dangerous.  On  the  contrary,  the  economies  effected 
by  the  concentration  and  combination  of  capital  and  its  direction 
by  competent  management  means  always  the  cheapening  of  com- 
modities to  the  public. 

During  the  process  of  reconstruction,  there  may  be  individual 
cases  of  hardship.  Certain  men  may  lose  their  positions,  but  this 
grows  out  of  the  economy  effected  by  the  new  organization,  and 
is  one  of  the  things  which  tend  to  cheapen  the  cost  of  produc- 
tion under  the  new  circumstances.  In  this  respect,  there  is  no 
difference  in  the  effect  from  that  caused  by  the  introduction  of 
labor-saving  machinery,  and  yet  the  day  has  long  gone  by  when 
remonstrance  is  effectual  against  the- introduction  of  appliances 
for  saving  labor  upon  the  ground  that  certain  operators  will  be 
thrown  out  of  employment  thereby. 

It  is  admitted  upon  all  hands  that  when  the  general  result 
is  for  the  good  of  the  public,  individual  cases  must  be  met  and 
adjusted  as  best  they  may.  In  the  old  days  of  teaming  over  the 
mountains  of  Pennsylvania,  the  building  of  a  canal  was  opposed 
by  the  teamsters  on  the  ground  that  it  would  hurt  their  business; 

801 


at  a  later  day,  the  canal  boatmen  in  turn  opposed  the  building 
of  a  railroad  for  the  same  reason,  but  boatmen  and  teamsters  alike 
had  to  give  way  for  the  advance  of  the  new  and  improved  mode 
of  transportation.  Oftentimes,  too,  the  injury  was  more  appar- 
ent than  real,  as  in  the  case  cited,  the  drivers  of  the  teams,  and 
captains  and  crews  of  the  boats,  many  of  them,  at  least,  found 
employment  as  railroad  employes,  and  so  were  really  not  injured 
by  the  change. 

Following  along  the  line  of  the  thought  just  suggested,  in 
the  early  days  of  railroad  building,  the  companies  were  small 
and  the  roads  were  short,  and  their  capital  was  limited.  Inde- 
pendent railroad  corporations  dotted  the  country  here  and  there, 
with  short  lines.  Eates  of  freight  and  passenger  fares  were  high. 
No  contract  for  through  or  continuous  carriage  could  be  made. 
Now  note  what  happened  in  the  case  of  the  projection  and  devel- 
opment of  the  Pennsylvania  Railroad  system.  Freight  rates  were 
about  five  cents  per  ton  per  mile.  The  process  of  combination 
of  the  little  roads  into  one  great  system  began.  One  road  after 
another  was  taken  in,  until  the  Pennsylvania  system  now  is  made 
up  of  more  than  two  hundred  and  fifty  companies,  which  were 
formerly  separate  and  independent  organizations.  The  result  has 
been  that  with  a  continued  and  steady  improvement  in  the  serv- 
ice, the  rates  of  freight  have  steadily  fallen,  until  now  the  cost 
of  moving  a  ton  of  freight  per  mile,  instead  of  being  five  cents, 
is  less  than  one-half  of  a  cent. 

Can  anyone  say  that  any  harm  has  resulted  to  the  interests 
of  the  public  from  the  consolidation  in  this  case?  Here  is  one 
of  the  largest  combinations  in  the  country,  and,  next  to  the 
Standard  Oil  Company,  possibly  railroads  are  the  subject  of 
attack  more  than  any  other  class  of  corporations.  I  submit  that 
the  facts  do  not  warrant  it.  The  Pennsylvania  Railroad  furnishes 
employment  for  more  than  one  hundred  thousand  men,  and  these 
men  probably  support  upon  an  average,  each  of  them  five  persons, 
so  that  five  hundred  thousand  people  depend  for  their  subsistence 
upon  the  prosperity  of  this  one  great  corporation.  And  this  is 
not  all — for,  in  addition  to  the  wages  paid  employes,  we  must 
remember  that  a  large  proportion  of  its  earnings  go  steadily  back 
to  the  community  for  the  purchase  of  supplies.  More  than  forty 
millions  of  dollars  a  year  are  poured  from  this  one  source  into 
the  channels  of  commerce.  The  amount  is  widely  distributed 
too,  as  the  articles  purchased  range  from  soap  and  matches  to 
monster  locomotives  and  steel  bridges  a  mile  long. 

This  is  a  striking  instance,  but  it  is  by  no  means  an  isolated 
one,  of  the  good  accomplished  by  means  of  great  combinations  of 

302 


capital.  The  larger  the  scale  upon  which  an  industry  is  carried 
on,  the  better  as  a  rule  is  the  provision  made  for  the  health  and 
comfort  of  the  workers.  Here  again  the  experience  of  the  Penn- 
sylvania Eailroad  is  an  instance  in  point.  It  has  from  time  to 
time  reduced  the  hours  of  labor  of  its  train  crews,  and  as  its  last 
and  crowning  effort  in  behalf  of  its  employes,  it  is  now  putting 
into  operation  a  system  of  retiring  them  at  the  age  of  seventy, 
upon  a  pension  sufficient  for  their  support.  Surely  there  is  noth- 
ing in  the  action  of  this  company  to  justify  the  assertion  that 
corporations  have  no  souls. 

Take  another  familiar  illustration-  of  combinations  upon  a 
large  scale,  which  appears  in  almost  every  large  city  in  the  coun- 
try. It  has  been  notably  effective  in  my  own  home  in  the  city 
of  Pittsburgh.  The  street  railway  system.  A  few  years  ago  we 
had  perhaps  a  dozen  different  lines  in  the  vicinity.  The  cars 
were  small,  and  were  drawn  by  horses,  and  a  separate  five-cent 
fare  had  to  be  paid  on  every  car  boarded.  With  the  introduction 
of  electric  motive  power,  larger  capital  was  needed  to  accomplish 
the  best  results,  and  consequently  the  small  roads  were  com- 
bined, and  complete  and  extensive  traction  systems  were  organ- 
ized, with  arrangements  for  transfers,  so  that  to-day,  for  the  same 
five-cent  fare,  you  can  ride  from  one  extremity  to  the  other,  sev- 
eral times  as  far,  and  twice  as  fast,  and  in  cars  in  every  way  more 
commodious  and  comfortable. 

Is  a  combination  producing  such  a  result  to  be  hastily  con- 
demned, or  destroyed? 

It  is  only  when  work  is  carried  on  upon  a  small  scale  that  long 
hours  of  labor,  low  wages,  and  unsanitary  conditions  are  found 
to  prevail.  Individual  employers  are  the  ones  who  run  the  sweat 
shops  and  employ  child  labor.  In  large  corporations,  the  rule 
is  that  hours  of  labor  are  shortened,  and  with  them  there  is  a 
general  acknowledgment  of  the  rights  of  the  employees.  The 
larger  the  concern  is,  the  greater,  too,  is  the  steadiness  of  em- 
ployment, and  the  more  influential  in  the  public  opinion  is  the 
standing  of  the  employee. 

With  the  good  management  which  they  are  able  to  employ, 
and  the  immense  amount  of  business  which  they  can  handle,  the 
average  rate  of  wages  rises,  while  the  price  of  the  service,  or  of  the 
product,  as  a  rule  continues  to  fall. 

There  are  instances  where  the  prices  in  certain  lines  of  business 
owing  to  the  fact  of  unregulated  and  excessive  competition,  have 
for  long  periods  been  continuously  too  low  to  afford  reasonable 
remuneration.  Let  me  cite  an  instance  which  has  come  under 
my  own  observation.  It  is  that  of  the  production  of  bituminous 

303 


coal.  The  city  of  Pittsburgh  is  in  the  center  of  the  bitumi- 
nous district.  For  the  past  twenty  years,  the  firms  engaged  in 
the  production  and  shipment  of  coal  have  struggled  along  in  keen 
and  sharp  competition  and  have  been  unable  to  make  anything 
in  the  business.  Many  of  them  have  succumbed  to  the  pressure 
and  been  driven  out  altogether.  Almost  constant  disputes  and 
friction  with  the  miners  has  been  the  inevitable  result.  The 
employers  simply  have  been  unable  to  pay  a  living  rate  of  wages. 
During  the  past  few  months  the  influence  of  the  present  tendency 
towards  combination  as  a  check  upon  excessive  competition  has 
reached  this  industry,  and  to-day  a  combination  is  in  process  of 
formation,  which  already  has  enabled  the  employers  to  effect  a 
slight  advance  in  the  selling  price  of  coal,  and  this,  with  the 
various  economies  which  co-operation  can  effect,  will  enable  them 
to  obtain  a  fair  return  for  their  capital,  and  at  the  same  time  per- 
mit of  an  increase  in  the  wages  of  the  miners. 

Here  again  is  a  practical  instance  of  great  good  accomplished, 
and  its  characteristics  are  those  common  to  all  similar  combina- 
tions. There  can  be  no  denial  that  they  carry  with  them  certain 
positive  economic  advantages.  They  decrease  the  cost  of  the 
product,  first,  by  doing  away  with  the  wasteful  methods  of  com- 
petitive business,  and,  second,  by  the  introduction  of  improved 
methods  of  work. 

They  are  also  enabled  by  the  exercise  of  intelligent  and  skilled 
oversight  of  the  business,  to  prevent  overproduction,  by  means 
of  their  ability  to  ascertain  the  state  of  the  markets,  and  regulate 
the  supply  in  accordance  therewith.  By  constant  study  of  the 
conditions  of  the  business  in  all  its  phases,  as  in  the  case  of  the 
Standard  Oil  Company,  they  are  enabled  to  increase  the  demand 
for  a  product,  and  thus  enlarge  the  consumption.  They  are  able 
also  to  provide  vastly  increased  facilities  for  transportation,  and 
by  reason  of  all  these  conditions  are  enabled  to  furnish  goods  at 
lower  prices  than  would  otherwise  be  possible. 

If  abuses  should  arise,  these  organizations  are  at  all  times 
amenable  to  the  law;  and  the  states  are  able  to  provide  against 
violation  of  reasonable  statutes.  No  combination  will  ever  be 
able  to  maintain  abnormal  prices,  for  the  reason  that  such  a 
course  would  call  into  play  the  possibility  of  practical  competi- 
tion, and  this  possibility  will  always  operate  as  a  check.  Another 
thing  which  will  prevent  any  undue  increase  in  price  is  the  fact 
that  any  great  advance  in  price  tends  to  lessen  the  demand. 
Nothing  is  better  known  to  experience,  than  the  fact  that  the 
profits  of  any  business  are  more  easily  and  permanently  increased 
by  the  cheapening  of  cost,  and  not  by  the  raising  of  prices. 

304 


In  all  the  combinations  that  have  thus  far  been  made,  prices 
have  been  but  slightly  advanced  by  reason  of  the  consolidation. 
The  rise  has  been  the  result  of  the  unusual  demand,  and  has  been 
as  great,  if  not  greater,  in  lines  where  no  combination  exists.  As 
an  example,  pig  tin  has  advanced  75  per  cent;  steel  plates  127 
per  cent;  refined  bar  iron  82  per  cent;  steel  rails  94  per  cent. 
Yet  in  none  of  these  is  there  a  combination.  In  all  these  com- 
modities and  many  others,  prices  have  gone  up  simply  because  of 
the  physical  inability  of  the  manufacturers  to  meet  the  demand. 

I  affirm,  therefore,  that  the  movement  toward  consolidation 
is  the  outgrowth  of  natural  conditions,  and  opposition  to  it  is 
based  upon  a  misunderstanding  of  the  fact  that  it  is  the  applica- 
tion ef  a  great  and  effectual  remedy,  to  the  demoralization  of 
business,  which  was  the  result  of  unlicensed  and  excessive  com- 
petition. Any  attempt  to  crush  out  or  interfere  with  the  proper 
and  reasonable  workings  of  this  remedy  is  utterly  hopeless.  The 
movement  is  bound  to  continue  until  practically  all  industrial 
activities  are  brought  into  a  system  of  co-operation. 

You  can  supervise,  and  you  can  regulate,  if  desired.  You  can 
establish  a  national  board  of  supervision  over  corporations  doing 
interstate  business.  You  can  limit  the  amount  of  capital  in  any 
one  corporation,  if  thought  wise.  You  can  correct  abuses  if,  and 
as,  they  arise.  But  the  people  who  have  learned  from  bitter 
experience  in  the  past  the  effect  of  the  competitive  system,  will 
not  give  up  the  right  to  co-operate  in  the  conduct  of  their  busi- 
ness, in  the  future. 

FKANCIS  G.  NEWLANDS. 

Member  Congress,  Nevada. 

First. — The  term  "trust"  is  a  misnomer  as  applied  to  the  com- 
bination of  capital  which  has  aroused  so  much  solicitude.  The 
old  trust  was  a  combination  of  independent  producers  to  fix  the 
price  of  a  particular  commodity.  Such  a  combination  could  be 
annulled  through  the  courts  as  an  agreement  in  restraint  of  trade. 
To-day  the  same  object  is  accomplished  in  a  legal  way,  viz. :  by  a 
union  of  capital  in  one  great  corporation  which  purchases  the 
property  of  the  independent  producer  and  makes  them  all  stock- 
holders in  a  common  enterprise.  Capital  has  learned  from  labor 
unions,  the  wisdom  of  co-operation,  and  co-operation  is  now 
largely  substituted  both  in  labor  and  capitalistic  unions  for  the 
old  principle  of  competition. 

It  is  contended  with  much  force  that,  if  the  right  of  laborers 

305 


to  combine  and  fix  the  price  of  labor  by  preventing  the  individual 
laborers  from  competing  for  a  job  by  the  acceptance  of  lower 
compensation  is  conceded,  it  must  also  be  conceded  that  capital 
has  the  same  right.  It  must  be  recollected,  however,  that  the 
labor  union  is  formed  for  the  purpose  of  obtaining  for  labor  an 
increased  share  of  the  profits  of  production,  and  that  the  accom- 
plishment of  such  a  purpose  is  a  distinct  advantage  to  society,  and 
should  be  favored,  whilst  the  capitalistic  union  may  so  exercise 
its  power  as  to  depress  the  price  of  labor  and  to  unduly  raise  the 
price  of  products,  and  as  this  power  can  only  be  exercised  through 
an  artificial  being  called  a  corporation,  which  is  the  creation  of 
the  state,  it  is  the  right  and  duty  of  the  state  to  limit  and 
control  it. 

Second. — Tariff  legislation  will  not  reach  the  difficulty,  for 
whilst  it  may  be  true  that  the  field  of  competition  is  restricted  by 
the  tariff  wall,  thus  making  the  organization  of  a  domestic  trust 
easier  by  reason  of  the  lack  of  foreign  competition,  yet  it  must  be 
recollected  that  combinations  of  capital  exist  in  England,  France 
and  Germany  to-day,  and  that  the  effect  of  lowering  the  tariff  wall 
would  simply  be  to  substitute  a  foreign  trust  for  a  domestic  trust 
in  the  control  of  our  markets.  This  would  be  at'the  expense  not 
only  of  American  capital  but  of  American  labor.  The  laborers 
now  employed  by  our  domestic  trusts  would  be  idle;  their  places 
would  be  taken  by  laborers  employed  abroad  by  the  foreign 
trusts ;  the  remedy  would  be  worse  than  the  disease.  The  Ameri- 
can union  of  capital  might  be  destroyed,  but  with  it  would  go 
down  the  American  union  of  labor. 

The  prosperity  of  the  republic  is  founded  upon  the  prosperity 
of  American  laborers.  All  legislation  should  place  the  Ameri- 
can man  above  the  American  dollar,  but  it  should  not,  in  its 
endeavor  to  rectify  the  abuses  of  American  unions  of  capital,  take 
away  the  employment  of  the  American  laborers.  What  we  should 
do  is  to  maintain  for  American  laborers  and  American  capital  the 
practical  monopoly  of  American  markets,  and  at  the  same  time 
by  domestic  legislation  inside  of  the  tariff  wall,  so  restrain  unions 
of  capital  as  to  prevent  them  from  oppressing  the  laborer  on  the 
one  side  and  the  consumer  on  the  other. 

Third. — All  attempts  to  regulate  capital  by  state  legislation 
will  fail  simply  because  it  will  be  impossible  to  produce  voluntary 
co-operation  among  the  various  states.  Some  states  will  welcome 
the  advantages  which  capital  extends  to  them  for  permitting 
their  territory  to  become  the  spawning  ground  of  trusts,  and  as 
long  as  one  state  fails  to  co-operate,  trusts  will  multiply. 

Fourth. — The  only  adequate  remedy  is  through  federal  legis- 

306 


lation,  the  operation  of  which  will  be  uniform  throughout  the 
republic.  It  is  true  that  the  federal  government  cannot  prevent 
the  organization  of  state  corporations,  nor  is  this  desirable;  but  it 
can,  through  its  power  regarding  the  regulation  of  interstate  coto- 
merce,  restrain  their  operations,  and  it  can  use  its  taxing  power  in 
such  a  way  as  either  to  destroy  or  to  regulate  and  control.  The 
power  relating  to  the  regulation  of  interstate  commerce  is  hardly 
sufficient  to  meet  the  evil,  as  evasion  would  be  easy.  Any  trust 
could  restrain  its  operations  to  the  limits  of  the  state  under  the 
laws  of  which  it  was  organized ;  at  the  same  time  purchasers  from 
other  states  could  buy  in  such  state.  The  sale  would  be  domestic, 
the  transfer  of  the  product  would  be  interstate,  and  legislation 
aimed  at  the  trust  in  its  interstate  business  might  thus  be  evaded. 

Fifth. — The  power  of  taxation  of  the  federal  government  is 
ample  to  meet  the  difficulty,  and  it  is  much  more  far-reaching 
than  the  power  exercised  under  the  interstate  commerce  section  of 
the  Constitution.  The  power  of  taxation  can  be  used  either  to 
destroy  or  restrain,  and  it  has  been  so  used  within  our  experience. 

Thus,  for  instance,  as  to  the  undoubted  right  of  state  banks  to 
issue  currency  under  state  statutes  permitting  it,  the  federal  gov- 
ernment does  not  deny  the  right,  but  it  has  seen  fit  to  impose  a 
tax  of  ten  per  cent  upon  state  bank  currency  and  thus  practically 
to  prohibit  its  issue. 

So.  also,  with  reference  to  oleomargarine.  The  beef  trust  had 
organized  for  the  production  and  sale  of  oleomargarine  upon  a 
great  scale.  Oleomargarine  was  innocuous  and  resembled  in  ap- 
pearance and  taste  the  genuine  butter.  The  use  of  this  material 
was  threatening  the  destruction  of  the  dairy  interests  of  the 
country,  in  which  large  amounts  of  capital  were  invested,  and 
hundreds  of  thousands  of  people  were  employed.  The  states 
took  hold  of  the  matter  and  by  legislation  within  their  own 
boundaries  sought  to  protect  the  dairy  interests  and  restrain  the 
oleomargarine  interests.  Their  legislation  was,  in  the  main, 
ineffective,  and  so  recourse  was  had  to  the  federal  government 
for  a  far-reaching  law.  The  result  was  that  the  power  of  taxation 
was  so  exercised  by  the  federal  government  as  to  restrain  the  oleo- 
margarine interests  and  to  protect  the  dairy  interests.  Thus, 
oleomargarine  was  made  a  subject  of  revenue  to  the  government 
and  the  tax  imposed  upon  it  served  to  limit  its  competitive 
efficiency. 

Here,  then,  we  have  two  illustrations  of  the  power  of  federal 
taxation ;  one  the  power  to  destroy,  the  other  the  power  to  regu- 
late and  restrain.  Why  cannot  this  power  be  used  with  reference 
to  the  modern  trust,  and  in  a  most  efficient  way?  Through  it 

307 


two  evil?  can  be  reached — one,  the  monopoly  of  production  by 
unions  of  capital,  and  the  other  the  escape  of  organized  wealth 
under  present  conditions  from  the  burthens  of  federal  taxation. 
The  latter  is  one  of  the  crying  evils  of  the  times.  The  whole  ten- 
dency of  federal  legislation  has  been  to  exempt  accumulated 
wealth.  The.  wealth  of  the  country  has  been  for  years  rapidly 
drifting  into  corporations.  Stocks  in  corporations  represent, 
more  than  any  other  class  of  property,  the  surplus  wealth  of  the 
country,  for  the  man  who  has  a  share  of  stock  has  something 
which  he  has  accumulated  over  and  above  his  current  wants  and 
expenditures,  and  the  best  method  of  reaching  the  surplus  wealth 
of  the  country  is  to  tax  corporations.  It  is  true  that  the  income 
tax  decision  has  in  a  measure  restricted  the  field  of  federal  taxa- 
tion. It  practically  exempts  real  property  and  its  income,  and 
personal  property  and  its  income,  from  internal  revenue  taxation ; 
yet  the  field  of  federal  taxation  is  still  a  large  one,  for  it  embraces 
all  the  transactions  of  business  and  though  the  real  and  personal 
property  of  a  corporation  and  the  income  therefrom  cannot  be 
directly  reached,  yet  every  transaction  in  which  such  corporations 
engage  may  be  made  the  subject  of  taxation  by  the  federal  govern- 
ment, and  the  taxes  imposed  may  be  classified  in  such  a  way  as  to 
restrain  unions  of  capital  in  their  monopolistic  tendencies. 

Now,  it  is  well  understood  that  the  great  monopolies  of  pro- 
duction can  only  be  accomplished  through  the  formation  of 
gigantic  corporations.  The  formation  of  those  gigantic  corpo- 
rations means  concentrated  control,  diminution  of  the  number  of 
officials,  improved  economies  in  every  line.  From  the  standpoint 
of  economics  it  is  hard  to  point  out  any  danger  to  which  society 
is  subjected  by  their  creation,  so  long  as  their  only  purpose  is  the 
conservation  of  energy ;  but  they  go  further  than  this.  If  allowed 
to  go  unchecked  they  will  undoubtedly  attack  labor  itself  by  the 
diminution  of  its  wages.  The  ordinary  producer,  having  but  one 
factory,  cannot  afford  to  get  into  a  controversy  with  his  employee? 
for  that  would  involve  an  absolute  cessation  of  the  work  of  his 
enterprise.  A  corporation  owning  a  dozen  factories  can  easily 
operate  eleven  whilst  it  is  engaged  in  bringing  the  operatives  of 
the  twelfth  to  its  terms,  and  thus  step  by  step  can  bring  about  a 
reduction  of  wages  throughout  all  of  its  twelve  factories.  So, 
also,  having  destroyed  competition,  it  can  raise  the  price  of  its 
products  and  thus  increase  the  profits  of  capital  both  by  dimin- 
ished wages  of  its  employees  and  increased  prices  charged  to  its 
consumers.  It  can  al«o  destroy  all  competition  by  selling  its 
products  below  cost  within  the  territory  of  competitive  operation, 
retaining  its  prices  in  the  field  of  its  monopoly,  and  thus,  without 

308 


loss  in  the  aggregate,  yield  to  a  localized  loss  which  will  destroy 
all  competitive  enterprises.  Thus  the  individual  stands  no 
chance  against  the  corporation,  and  individualism  is  practically 
destroyed. 

The  purpose,  then,  of  federal  legislation  upon  this  subject 
would  be  to  reach  accumulated  wealth,  and  at  the  same  time  pro- 
tect individualism.  Taxes,  therefore,  imposed  upon  the  transac- 
tions of  corporations,  will  accomplish  both  purposes.  They  will 
reach  accumulated  wealth  and  they  will  protect  individualism, 
for  the  individual,  freed  from  the  handicap  of  such  taxes,  may  be 
able  to  hold  his  own  and  thus  the  handicap  of  the  tax  will  pre- 
serve the  equilibrium  between  individual  enterprises  on  the  one 
hand  and  corporate  enterprises  on  the  other. 

It  is  true  that  it  will  take  time  to  work  out  this  problem 
wisely  and  justly,  but  I  see  no  reason  why  progressive  legislation 
advancing  with  conservatism,  step  by  step,  should  not  ultimately 
reach  every  difficiilty.  The  first  step  should  be  the  organization 
of  a  Bureau  of  Industry,  somewhat  resembling  that  of  the  Bureau 
of  the  Controller  of  the  Currency,  to  which  report  should  be 
made  by  all  corporations,  showing  the  amount  of  their  capital 
stock,  their  bonds,  their  income,  their  transactions,  the  number  of 
operatives  employed,  the  wages  paid  and  all  the  other  data  which 
in  time  will  present  a  mass  of  statistical  information  that  will  aid 
and  guide  legislation.  Publicity  itself  will  do  much  in  the  way 
of  correcting  evils,  for  definite  statistics  will  suggest  definite 
remedies.  The  tax  at  first  inaugurated  should  be  moderate.  It 
should  reach  at  first  only  those  great  organizations  whose  evil 
effects  upon  modern  individualism  is  conceded,  and  reliance 
should  be  placed  upon  the  statistics  accumulated  later  on,  to  fur- 
nish suggestions  for  additional  tax  legislation. 

The  powers  of  The  federal  government  relating  to  taxation 
and  interstate  commerce  in  connection  with  published  reports 
should  be  ample  to  meet  every  difficulty.  No  time  should  be 
wasted  in  academic  discussion  as  to  the  precise  evils  that  may 
result  from  unions  of  capital,  or  as  to  whether  such  evils  have  as 
yet  been  realized.  Accumulated  wealth  should  contribute  more 
than  it  does  to  the  federal  revenue.  This  is  a  sufficient  reason  for 
commencing  immediately  with  corporations,  even  if,  as  is 
claimed,  the  evil  of  unions  of  capital  are  imaginary.  The  ma- 
chinery being  prepared  by  law,  the  evils  can  be  taken  hold  of  as 
they  arise,  and  taxation  so  levied  as  to  restrain  if  that  only  is 
desirable,  or  to  destroy  if  relief  is  otherwise  unobtainable. 


309 


U.  M.  ROSE. 

Little  Rock  Board  of  Trade. 

Reference  may  be  made  to  the  Arkansas  statute  of  March  6, 
1899,  restraining  trusts,  as  a  piece  of  experimental  legislation. 
It  provides,  in  short,  that  all  persons  and  corporations  that  shall 
become  a  party  to  any  pool,  trust  or  combination,  for  the  purpose 
of  fixing  prices  of  merchandise,  commodities,  premiums  of  insur- 
ance, etc.,  enumerated  at  great  length,  "shall  be  deemed  and 
adjudged  guilty  of  a  conspiracy  to  "defraud,"  and  subject  to  a 
punishment  "of  from  $200  to  $5,000.  For  every  offense,  each  day 
of  the  continuance  of  such  pool,  etc.,  to  be  a  separate  offence,  and 
it  was  declared  that 'off ending  domestic  corporations  should  for- 
feit their  charters,  and  that  offending  foreign  corporations  should 
forfeit  their  privilege  of  doing  business  in  the  state.  Moreover, 
foreign  corporations  were  made  subject  to  the  same  penalties  as 
domestic  corporations. 

It  will  be  observed  that  the  statute  did  not  specify  the  place 
where  the  combinations  were  made  in  order  to  render  parties  to 
them  subject  to  its  penalties.  The  attorney-general  at  once 
brought  about  one  hundred  and  fifty  suits  against  foreign  insur- 
ance companies  and  foreign  manufacturing  companies  for  a  for- 
feiture of  privileges  of  doing  business  in  the  state,  and  for  the 
recovery  of  the  penalties  denounced  by  the  statute. 

Some  of  the  defendants  demurred  because  the  complaints  did 
not  allege  that  the  alleged  combinations  were  not  formed  either  in 
the  state  or  with  a  view -to  fix  prices  of  commodities,  etc.,  in  the 
state ;  while  others  answered,  denying  that  they  had  entered  into 
any  combination  in  the  state,  or  having  for  its  object  the  fixing  of 
prices  in  the  state. 

The  cases  went  to  the  Supreme  Court,  where  it  was  held  that 
where  a  criminal  or  penal  statute  does  not  purport  to  have  been 
intended  to  have  an  extra-territorial  operation  it  must  be  held  to 
apply  only  to  offences  committed  within  the  state ;  consequently 
that  the  answers  set  up  a  valid  defence.  The  decision  in  the 
matter  is  to  be  found  in  State  vs.  Lancaster  Fire  Ins.  Co.,  51  S. 
W.  R.  633.  As  soon  as  it  was  rendered  the  attorney-general  dis- 
missed all  of  the  pending  suits. 

There  is  nothing  novel  about  the  decision;  the  principle  is 
elementary  and  axiomatic.  Indeed,  the  same  court  had  decided 
the  same  thing  in  1856,  in  State  vs.  Chapin,  17  Ark.  561. 

It  remains  to  be  said  that  as  soon  as  this  statute  was  passed 
all  of  the  foreign  insurance  companies  doing  business  in  the  state, 
with  one  exception,  I  believe,  closed  their  doors  and  declined  to 

310 


do  any  business  until  the  question  of  their  liability  under  this 
severe  statute  should  be  settled.  As  soon  as  it  was  settled  they 
resumed. 

It  must  be  obvious  that  legislation  along  this  line  does  not 
reach  the  heart  of  the  matter.  Of  course  it  is  possible  to  drive 
all  foreign  corporations  out  of  any  state  by  Isgislative  enactment ; 
but  while  such  a  course  would  cause  a  great  shock  to  public  busi- 
ness as  now  organized,  the  real  evils  would  not  be  affected.  We 
might  expel  foreign  corporations  engaged  in  manufacturing  nails, 
for  example,  but  people  would  still  have  to  buy  nails,  as  they  are 
articles  of  necessity ;  while  the  nail  trust  would  continue  to  dupli- 
cate prices  as  heretofore.  The  same  thing  is  true  of  nearly  all 
other  manufactured  commodities.  Laws  against  monopolies  are 
of  very  ancient  origin,  based  on  principles  of  public  policy  that 
have  found  expression  in  some  of  our  state  constitutions,  and 
which  have  for  long  periods  lain  as  disused  weapons  in  the 
armory  of  the  law;  until  now,  when  something  of  the  kind  is 
needed,  it  is  found  that  they  are  quite  inadequate  to  the  occasion. 
Our  government  has  survived  so  many  perils,  and  our  confidence 
in  its  ability  to  overcome  all  difficulties  has  become  so  robust,  that 
any  one  who  ventures  to  express  any  distrust  of  the  future  is  apt 
to  be  considered  as  a  modern  Cassandra,  indulging  in  groundless 
forebodings;  but  the  admitted  fact  that  within  a  few  years  past 
we  have  undergone  a  social  revolution  of  a  kind  and  a  magnitude 
wholly  unknown  to  history,  one  that  places  power  in  the  hands  of 
comparatively  a  handful  of  individuals  to  control  the  prices  of 
most  articles  of  manufacture,  thereby  enriching  themselves  at 
will,  while  they  impoverish  the  vast  multitude  of  consumers;  that 
various  corporations  representing  fabulous  wealth  are  in  a  posi- 
tion to  exercise  exclusive  dominion  over  nearly  all  of  the  indus- 
tries of  the  country,  and  to  impose  excessive  burdens  on  the  rest 
of  their  countrymen  precisely  as  does  the  patentee  of  a  new  inven- 
tion, except  that  their  dominion  acknowledges  no  limitation  in 
respect  of  time  or  law,  must  surely  afford  food  for  the  gravest 
reflection. 

If  the  recent  and  enormous  aggregation  of  wealth  under  cor- 
porate control,  running  into  billions,  and  putting  to  shame  the 
budgets  of  the  most  powerful  nations  on  earth,  were  alone  to  be 
regarded,  the  present  emergency  is  full  of  suggestions  of  a  sudden 
collapse  exceeding  in  its  disastrous  consequences  those  that  re- 
sulted from  the  inflictions  of  John  Law  in  France,  or  of  the 
South  Sea  Bubble  in  England.  The  speedy  growth  of  this  ex- 
traordinary development,  like  the  conquests  of  Alexander,  Caesar 
and  Napoleon,  foretells  its  sudden  collapse,  whose  ruinous  effects 

311 


must,  as  usual  in  such  cases,  fall  chiefly  on  the  innocent,  the  inex- 
perienced and  the  unwary.  During  the  Middle  Ages,  when  there 
were  neither  bonds  nor  stocks,  and  but  little  personal  property  of 
any  kind,  a  monopoly  of  lands  led  to  the  establishment  of  the 
feudal  system,  the  most  blighting  and  desolating  that  ever 
afflicted  mankind.  In  a  time  of  ignorance  it  managed  by  mere 
physical  force  to  perpetuate  its  existence  for  centuries,  and  to 
check  the  evolution  of  progress,  which,  in  the  present  period  of 
enlightenment,  travels  with  lightning  speed,  so  that  no  such 
exceptional  longevity  can  be  expected  for  a  new  feudalism  based 
on  vast  accumulations  of  corporate  wealth,  which  has  no  armed 
castles  for  defense,  and  is  condemned  by  principles  of  public 
policy  equally  immemorial  and  indestructible. 

As  a  people  and  as  individuals  we  have  been  nurtured  in  con- 
victions that  are  hostile  to  monopolies,  and  those  convictions  will 
hardly  be  weakened  by  the  present  exigencies.  Never  since  the 
controversy  growing  out  of  African  slavery  have  the  people  of 
this  country  been  confronted  with  any  question  of  equal  impor- 
tance and  of  equal  difficulty.  The  question  of  slavery  was  settled 
by  England,  Bussia,  Spain  and  Brazil  without  any  great  expendi- 
ture of  money,  and  without  the  shedding  of  blood;  but  American 
statesmanship,  inadequate  to  cope  with  the  situation,  had  to 
resort  to  a  war  in  which,  considering  its  incalculable  expense  in 
money  and  the  destruction  of  property,  more  was  lost  than  would 
have  paid  for  the  slaves  many  times  over,  to  say  nothing  of  the 
fearful  loss  of  life. 

The  present  situation  contains,  I  believe,  all  of  the  elements 
of  socialism,  anarchy  and  that  deus  ex  mackina,  imperialism,  that 
always  emerges  at  the  proper  moment.  The  question  as  to  the 
suitable  remedy  to  be  applied  is  one  that  has  exercised  and 
baffled  the  strongest  minds.  The  proposal  to  drive  foreign  cor- 
porations out  of  particular  states,  and  thus  to  build  around  them 
a  Chinese  wall  of  exclusion,  will  not  attain  the  desired  end.  We 
shall  still  have  to  buy  everything  almost  that  we  require  at  prices 
arbitrarily  fixed  by  the  monopolies  which,  intrenched  behind 
charters  granted  by  other  states,  defy  legislation  of  that  kind, 
saying,  "If  you  do  not  buy  of  us  you  cannot  buy  at  all." 

We  are  told  that  if  all  of  the  states  and  the  federal  govern- 
ment will  concur  in  the  proper  legislation  pending  evils  may  be 
corrected,  and  future  ills  may  be  prevented ;  but  the  principle  of 
unanimity,  which  in  Poland  was  sometimes  tempered  by  assassina- 
tion, is  not  practicable  in  our  government.  At  no  time  since  its 
organization  has  uniformity  of  legislation  been  secured;  and  the 
prospect  of  such  uniformity  at  present  seems  slim  and  remote. 

312 


As  it  has  been  decided  by  the  federal  court  of  last  resort  that 
Congress  has  no  delegated  power  to  restrain  the  organization  of 
trusts  and  combines  •  between  manufacturing  companies,  it  is 
needless  to  expect  efficient  aid  from  a  body  which  it  is  incom- 
petent to  grant.  To  hope  for  remedy  or  redress  from  the  mere 
lapse  of  time  would  seem  to  be  madness.  By  amendment  to  the 
Constitution  of  the  United  States,  Congress  can  be  invested  with 
power  to  deal  with  the  evil  in  all  of  its  phases,  just  as  the  English 
parliament  dealt  with  it  as  long  ago  as  the  reign  of  Edward  VI. ; 
but  this  step  is  one  of  such  profound  and  far-reaching  importance 
that  it  will  necessarily  excite  the  distrust  and  qpposition  of  many 
that  view  the  present  situation  with  unfeigned  alarm,  and  whose 
hostility  to  monopolies  is  sincere  and  lasting. 

The  problem  is  one  that  will  be  exploited  by  the  political 
demagogue,  whose  words  darken  counsel ;  but  violent  and  inflam- 
matory declamation  can  avail  nothing.  What  is  needed  is  the 
deliberate  wisdom  of  the  statesman  who  will  act  with  an  eye  single 
to  the  public  security  and  welfare. 

I  am  not  of  the  opinion  that  laws  requiring  publicity  in  the 
keeping  of  corporate  books  and  accounts  will  meet  the  objects  in 
view.  Similar  laws  have  been  often  passed,  and  have  been  con- 
stantly evaded  with  impunity.  The  search  for  truth  in  the  intri- 
cate maze  of  corporate  documents  has  proved  to  be  extremely 
discouraging. 

In  the  meantime  the  problem  clamors  for  solution.  Every 
day  we  hear  of  new  combinations,  extending  in  their  range  from 
steam  engines  to  peanuts.  If  the  public  prints  are  to  be  believed, 
millions  are  sometimes  paid  to  agents  who  succeed  in  effecting 
these  trusts  or  pools,  however  created.  It  can  hardly  be  doubted 
that  much  of  this  money  entrusted  to  "promoters"  is  used  for 
purposes  of  bribery  and  corruption.  Every  day  we  hear  that 
superfluous  factories  or  mines  have  been  closed,  and  that  hundreds 
of  men  have  been  thrown  out  of  employment.  The  same  thing 
happened  in  England  when  railroads  and  improved  spinning 
machinery  were  introduced;  but  the  whole  country  was  enriched 
and  benefited  by  these  inventions;  not  so  with  monopolies,  which 
have  always  proved  to  he  mere  festering  cancers  on  the  body 
politic.  The  watered  stock  and  bonds  which  attend  their  mod- 
ern creation  only  enhance  their  power  for  evil. 

At  10:15  o'clock  the  conference  adjourned  tc  10  o'clock  Fri- 
day morning,  September  15. 


313 


MORNING  SESSION,   SEPTEMBER   15. 
COMMITTEE  ON  RESOLUTIONS  MEET. 

The  committee  on  resolutions  met  at  9 :30  o'clock  and  organ- 
ized by  electing  ex-Gov.  Luce,  of  Michigan,  chairman,  and  Ralph 
M.  Easley  secretary.  The  same  doubts  and  differences  on  the 
subject  of  resolutions  which  had  agitated  the  conference  when  the 
question  of  the  committee  was  debated,  prevailed  in  the  commit- 
tee meeting.  On  motion  of  Howe,  of  Louisiana,  the  chair  was 
instructed  to  appoint  a  sub-committee  of  five  on  resolutions,  and 
after  a  general  debate  of  an  hour's  duration  on  the  policy  to  be 
followed  by  the  committee  an  adjournment  was  taken  until  2 
o'clock. 

William  Wirt  Howe  was  in  the  chair  and  called  the  conference 
to  order  at  10 :30  o'clock.  A  delegate  called  the  attention  of  the 
chair  to  the  fact  that  many  more  delegates  were  present  than  at 
any  previous  meeting,  and  suggested  that  the  credentials  of  all 
persons  in  the  delegates'  seats  should  be  examined.  No  formal 
motion  was  put  and  the  suggestion  was  not  acted  upon.  Louis 
F.  Post,  of  the  National  Single  Tax  League,  was  the  first  speaker. 

LOUIS  F.POST. 

Single  Tax  League  of  the  United  States. 

My  only  purpose  in  speaking  on  this  occasion  is  to  contribute 
to  these  deliberations  a  brief  statement,  in  bare  outline,  of  the 
position  of  single  tax  men  on  the  subject  of  trusts.  By  single 
tax  men  1  mean  those  men  the  world  over — *and  women,  too — 
who  are  proud  to  be  known  as  followers  of  Henry  George. 

We  recognize  that  there  might  be  such  a  thing  as  a  good 
trust.  There  might  be  commercial  combinations  that  would  re- 
duce prices  by  economizing.  They  would  indeed  displace  men, 
as  all  labor-saving  machinery  and  methods  do;  but  under  just 
and  normal  conditions,  there  would  be  abundant  opportunities 
for  all  who  were  displaced.  Immediate  demands  for  them  in  kin- 
dred occupations  would  constantly  exceed  the  supply.  Such 
trusts  would  tend  to  improve  social  conditions  instead  of  making 
them  worse.  Those  are  the  kind  of  trusts  which  our  pro-trust 

314 


friends  have  in  mind  when  they  defend  the  trust.  But  in  fact 
there  is  no  such  trust  in  existence  to-day,  and  under  prevailing 
industrial  conditions  there  can  be  no  such  trust. 

The  trust  question  as  it  faces  us  is  not  a  question  of  business 
combination.  It  is  a  question  of  legal  monopoly.  If  competi- 
tive conditions  prevailed,  combinations  of  competitive  businesses 
would  do  no  harm.  They  would  have  to  do  good,  or  they  couldn't 
keep  the  combination  alive.  But  when  businesses  control  legal 
monopolies  and  form  combinations  of  these,  then  you  have  harm- 
ful trusts.  And  that  is  the  kind  of  trust  we  have  to-day — the 
kind  of  trust  of  which  we  complain.  The  trust  question,  I  re- 
peat, is  at  bottom  not  a  question  of  business  combinations,  but 
a  question  of  legal  monopoly.  It  is  not  to  be  dealt  with  by  re- 
strictive laws,  operating  upon  methods  and  effects.  That  would 
only  make  bad  conditions  worse.  You  have  got  to  go  beneath 
the  methods  and  effects  and  get  at  the  causes  of  these  bad  trusts. 
You  have  got  to  strike  at  the  monopolies  which  give  them  their 
power.  Abolish  the  legal  monopolies  that  underlie  trusts,  and 
trusts  will  disappear.  Without  these  monopolies  no  business 
combination  could  be  injurious  to  the  public.  Without  them 
every  business  combination  that  came  to  stay  would  be  able  to 
stay  only  if  it  proved  to  be  really  and  wholly  beneficial.  But 
if  those  monopolies  be  perpetuated,  all  trusts  will  be  tainted,  all 
trusts  will  be  bad ;  and  by  no  system  of  restriction  can  you  either 
destroy  them  or  regulate  them  for  the  public  good. 

Take  any  trust  which  on  its  face  seems  to  be  a  combina- 
tion of  mere  competitive  interests.  If  it  were  so  in  fact,  it  would 
be  a  good  or  at  least  a  harmless  trust.  But  scrutinize  it,  and  you 
will  find  that  somehow,  directly  or  indirectly,  it  depends  for  its 
power  upon  monopoly.  It  may  have  no  monopoly  by  name.  It 
may  simply  be  taking  advantage  of  general  laws  that  prevent 
free  competition.  It  may  depend,  for  example,  upon  the  restric- 
tions upon  free  competition  which  are  imposed  by  tariffs.  To 
the  extent  that  the  tariff  narrows  the  field  of  competition,  to 
that  extent  it  fosters  trusts.  One  of  the  very  objects  of  the 
tariff  is  to  produce  that  condition  of  strangulated  competition 
without  which  trusts  could  not  live.  If  we  wish  to  get  rid  of 
the  trust,  we  must  sweep  away  the  tariff  and  make  trade  as  free 
between  the  people  of  the  world  as  it  is  between  the  people  of 
our  States. 

While  single  tax  men  demand  the  abolition  of  the  tariff- 
offering  in  its  place  for  revenue  purposes  an  infinitely  wiser  and 
juster  system  of  taxation — while  they  would  have  no  tariff  at  all, 
yet  they  do  not  suppose  that  the  abolition  of  the  tariff  would 

315 


abolish  all  trusts.  It  would  abolish  a  good  many,  and  weaken 
the  foundation  of  a  good  many  more.  But  other  and  more  direct 
systems  of  legal  monopoly  would  still  foster  trusts. 

There  are  the  highway  monopolies.  Take  the  railroads,  for 
instance.  That  is  a  highway,  and  in  private  hands  is  a  highway 
monopoly.  The  monopoly  is  not  in. the  cars,  or  tracks,  or  tun- 
nels, or  buildings,  or  anything  of  that  sort.  It  is  in  the  right- 
of-way — in  the  land  that  constitutes  the  "way"  as  distinguished 
from  the  structure.  These  highways  connect  places,  and  to 
control  them  is  to  control  traffic.  Eailroad  corporations  can  form 
oppressive  trusts  because  they  can  control  their  highway  monop- 
olies. 

They  can  and  do  do  more  than  that.  Give  this  monopoly 
of  highways  to  railroad  corporations,  and  they  make  exclusive 
contracts  with  business  concerns,  which  form  trusts  upon  the 
basis  of  special  railroad  privileges.  One  of  the  most  familiar 
examples  of  this  subletting  of  railroad  highways  is  furnished  by 
the  case  of  express  companies.  Express  companies  have 
monopolies,  because  they  get  special  privileges  from  rail- 
roads. No  outsider  can  compete  in  the  express  business.  The 
existing  express  companies  have  monopolies  of  right-of-way. 
And  they  can  form  oppressive  trusts  by  combining  these  monop- 
olies. Express  companies  are  only  one  class  of  concerns  deriving 
monopoly  privileges  in  that  way.  There  are  others.  The  Stand- 
ard Oil  trust  built  up  its  power  in  precisely  that  way.  The 
cracker  trust  is  said  to  have  privileges  of  this  kind.  And  doubt- 
less, if  you  inquire  closely,  you  will  learn  that  many  a  trust  with 
an  innocent  face  derives  its  power  from  railroad  privileges. 

Highway  monopolies,  then,  must  be  abolished,  if  we  would 
free  ourselves  from  vicious  trusts.  But  even  if  that  were  done, 
trusts  would  still  have  a  firm  foundation  to  build  upon.  The 
fact  is  that  even  to-day  no  trust  can  perpetuate  itself  unless  it 
gets  its  feet  upon  the  ground.  All  the  advantages  of  tariffs 
and  railway  privileges  and  other  monopolies  will  not  avail  trusts 
in  conflict  with  hostile  trusts  which  monopolize  sources  of  supply 
and  distributive  points.  Monopoly  of  land  is,  after  all,  the  ulti- 
mate basis  of  the  trust.  It  is  an  absolute  condition  to  success 
that  the  trust  have  its  feet  upon  the  earth.  This  has  been  dis- 
covered by  the  great  trusts.  The  steel  trust  and  the  copper 
trust  go  back  to  the  land  and  make  ore  mines  part  of  their  prop- 
erty, while  the  coal  transporting  trust  of  the  anthracite  region 
is  careful  to  secure  not  only  highways  but  coal  mines;  and  rail- 
road monopoly  in  itself  is  being  subjected  to  the  more  powerful 
monopoly  of  land  at  terminal  points. 

316 


Let  me  follow  this  idea  a  little  further.  The  control  of  trusts 
by  trusts  is  clearly  among  the  possibilities  of  trust  development. 
As  partnerships  have  merged  into  corporations  and  corporations 
into  trusts,  so  will  trusts  merge  into  trusts  of  trusts,  and  finally 
into  one  all-powerful  trust.  That  is  the  tendency.  It  is  already 
manifest,  and  will  be  a  thing  accomplished  unless  we  kill  the 
trust  system. 

Suppose,  for  example,  the  steel  trust  should  reach  out  until 
it  controlled  all  the  steel  business  clear  back  to  all  the  ore  mines. 
It  would  then  have  its  feet  upon  the  ground,  and  no  competitor 
in  the  steel  business  could  cope  with  it.  But  it  must  use  coal, 
and  here,  let  us  suppose,  is  one  coal  trust  which  has  reached  out 
until  it  controls  all  the  coal  mines.  It,  too,  has  its  feet  upon 
the  ground.  Suppose,  now,  that  the  interests  of  these  trusts 
collide,  and  what  could  be  the  outcome  but  the  consolidation  of 
the  two  into  one.  That  illustrates  the  trend  of  trusts.  And  if 
not  stopped,  that  trend  will  persist  until  the  organization  of  trusts 
and  their  absorption  into  trusts  of  trusts  eventuate  in  the  owner- 
ship of  all  businesses  by  some  gigantic  combination. 

To  that  triumph  of  the  trusts  most  socialists  look  forward 
with  satisfaction.  They  see  in  it  the  opportunity  of  the  people 
to  take  possession  not  only  of  the  earth,  but  of  the  artificial  in- 
struments of  production  also,  by  dethroning  the  single  trust  under 
whose  control  all  business  will  have  come.  They  are  satisfied, 
because  in  this  trend  they  discover  signs  of  the  evolution  of  public 
ownership  of  all  the  instruments  of  uroduction  and  distribution. 
But  there  is  little  real  cause  for  satisfaction  in  that.  As  the 
evolution  of  the  trust  proceeds,  trust  employes  become  in  greater 
and  greater  degree  mere  voting  machines.  It  is  not  their  con- 
victions as  citizens  that  they  register  at  the  polls.  They  vote 
as  they  are  ordered  to.  This  condition  would  be  enormously 
worse  if  the  development  of  trusts  proceeded  even  approxi- 
mately to  the  point  of  a  universal  trust.  And  when  the  time 
came  to  dethrone  trusts,  the  voice  of  the  people  would  be  stifled. 
The  trusts  themselves  would  decide  the  issue.  They  would  do 
it  through  the  army  of  dependent  voters  whose  livelihood  they 
would  control.  It  might  be  that  they  would  decide  in  favor 
of  the  substitution  of  such  a  government  trust  as  the  socialists 
look  forward  to.  But  if  they  did,  they  themselves  would  fix  the 
terms.  All  land  and  all  machinery  might  by  their  consent  and 
with  the  votes  of  their  dependents,  be  turned  over  to  the  govern- 
ment, but  it  would  be  for  a  price  which  the  trust  magnates  would 
dictate  and  to  a  government  which  they  would  continue  to  con- 


si? 


trol.  It  is  not  by  waiting  until  trusts  own  everything  and  then 
taking  it  from  them  that  the  trust  question  must  be  met. 

We  must  kill  the  trust  by  securing  in  time  the  point  of  vant- 
age toward  which  it  is  advancing.  We  must  keep  its  feet  off 
the  ground.  It  would  not  be  enough  to  abolish  secondary  monop- 
olies. We  must  also  abolish  the  monopoly  of  sources  of  supply 
and  points  of  distribution. 

Since  trusts,  in  order  to  survive,  must  get  their  feet  upon  the 
ground,  must  control  the  earth  at  the  points  of  supply  and  the 
points  of  distribution,  the  abolition  of  all  monopolies  except 
land  monopoly  would  fail  to  abolish  them.  By  acquiring  control 
of  the  land  they  would  control  everything  else.  So  it  is  that 
single  tax  men,  though  they  would  abolish  the  tariff,  though  they 
would  abolish  highway  monopolies,  though  they  would  repeal 
every  law  that  creates  or  supports  monopoly,  they  would  not 
stop  there.  They  would  strike  at  the  mother  monopoly  of  all. 
They  would  abolish  the  monopoly  of  land.  To  do  that  they 
propose  nothing  revolutionary.  Kevolution  is  not  necessary. 
All  that  is  necessary  is  to  tax  into  the  public  treasury  the  peculiar 
value  that  attaches  to  especially  advantageous  locations.  If  that 
were  done,  no  man  or  combination  of  men,  whether  incorporated 
or  not,  could  monopolize  the  sources  of  supply  or  the  points  of 
distribution  without  paying  annually  to  the  public  the  full  value 
of  their  privilege.  That  would  deprive  them  of  all  advantage 
over  others.  It  would  lift  their  feet  off  the  ground. 

You  remember  the  classic  fable  of  Hercules  and  Antaeus. 
Hercules  with  all  his  strength  could  not  conquer  Antaeus  so 
long  as  Antaeus  could  touch  the  ground.  But  when  Hercules 
discovered  wherein  the  power  of  his  adversary  lay,  he  lifted 
Antaeus  from  the  ground  and  then  destroyed  him  with  ease. 
The  trusts  are  the  modern  Antaeus.  Let  the  people  lift  them 
from  the  ground  and  the  battle  against  them  will  be  won. 

While  Mr.  Post  was  speaking  the  committee  on  resolutions 
entered  the  hall  and  filled  every  seat  reserved  for  the  delegates. 
The  other  portion  of  the  auditorium  had  been  filled  with  auditors 
long  before. 


318 


THOMAS  j.  MOEGAN. 

Socialist. 

Mr.  Post  was  followed  by  Thomas  J.  Morgan,  of  Illinois,  who, 
speaking  on  "The  Trust  from  a  Socialist  Point  of  View,"  said: 

We  see,  from  the  socialistic  view,  not  the  special  interest  of 
this  or  that  trade,  of  this  or  that  business,  of  this  or  that  state, 
of  this  or  that  nation,  of  this  or  that  particular  race,  but  we  see 
the  interest  of  the  whole  human  race,  as  it  is  involved  in  the  de- 
velopment of  modern  industry  and  modern  commerce. 

We  socialists  look  into  the  past  and  see  the  end  of  the  feudal 
system.  We  see  the  domination  of  the  landed  aristocracy  de- 
stroyed and  the  rising  importance  of  the  new  manufacturing  and 
business  interests.  We  see  the  employer  and  the  merchant 
stepping  into  the  imperial  parliaments  and  taking  charge  of  the 
nations.  We  see,  following  the  individual  employer,  a  partner- 
ship; following  the  partnership  we  find  a  corporation,  and  fol- 
lowing the  corporation  in  its  logical  order,  we  see  the  introduc- 
tion of  the  trusts.  We  welcome  the  appearance  of  the  trust  as 
one  of  the  natural  and  inevitable  products  of  our  industrial  and 
commercial  system. 

The  socialist  sees  that  you  are  totally  impotent  to  prevent  the 
operation  of  trusts.  You  are  impotent  to  interfere  with  its 
growth  in  the  states  or  in  the  Union.  It  overrides  your  state 
and  national  laws  in  its  progress. 

The  socialist  sees  what  you  fail  to  perceive;  that  is,  that  in- 
dustry and  commerce  has  long  ceased  to  be  mere  local,  state,  and 
national  interests,  and  that  the  limits  of  the  workshop,  the  farm, 
and  the  market  are  co-extensive  with  the  boundaries  of  the  hab- 
itable earth,  and  hence  that  the  controlling  influences  are  world- 
wide, and  above  and  beyond  the  reach  of  all  your  puny  efforts. 

It  is  very  interesting  to  note  the  very  high  stand  that  is  taken 
by  those  who  are  opposed  to  their  natural  offspring,  the  trust. 
They  pose  before  the  American  people  as  the  guardians  and 
champions  of  personal  liberty,  of  good  citizenship,  of  manhood, 
and  they  tell  us  that  unless  the  trust  is  destroyed  we  must  go 
back  to  the  individual  methods  of  industry  and  business  of  the 
past,  or  we  will  become  slaves;  that  our  dependence  in  the 
future  must  be,  not  upon  gigantic  organizations  of  property  own- 
ers, but  upon  the  single  individual  property  owners.  We  social- 
ists go  back  and  look  over  your  records,  and  we  ask  you  to  listen 
to  what  the  individual  employer  and  business  man  did  before 

319 


the  corporation  came  and  before  the  trust  was  dreamed  of.  You 
individual  employers,  you  individual  business  men,  you  opened 
the  doors  of  the  orphan  asylum,  and  you  took  out  of  it  the  fath- 
erless children,  and  put  them  into  your  individual  factories, 
and  ground  their  lives  into  dollars;  you  took  the  man  and  his 
wife;  you  took  the  mother  and  the  child,  and  you  put  them  into 
the  bowels  of  the  earth  to  bring  out  your  black  diamonds  so  you 
could  enrich  yourselves.  You  sent  your  old  rotten  ships  to  sea 
with  worthless  cargo,  so  they  might  sink  with  their  crews,  so 
you  could  enrich  yourselves  with  the  fraudulent  insurance.  And 
an  act  of  Parliament  was  required  to  prevent  you  from  continuing 
this  murderous  method  of  enrichment. 

This  spirit  of  murderous  greed  is  not  dead.  It  is  seen  in 
Africa,  where  the  Kaffir  is  down  in  the  diamond  mines  and  the 
gold  mines.  It  is  seen  in  the  effort  to  subject  the  Boers.  Not 
alone  there,  but  here — you  freed  Cuba,  didn't  you?  Oh,  the  poor 
Cubans,  they  must  be  freed  from  Spain!  But  what  do  you  do 
with  the  negro  down  South?  You  disfranchise  him.  Then  you 
individualistic  business  men,  your  spirit  goes  out  into  the  Philip- 
pines, and  will  reduce  the  Filipinos  to  the  level  of  your  negroes 
down  South. 

You  go  down  to  your  sunny  Southland  here,  and  what  do  you 
see?  From  Virginia  and  Arkansas,  and  all  these  other  places 
where  these  men  have  addressed  you  about  personal  liberty  and 
about  the  enormous  resources  of  their  states  as  one  of  the  induce- 
ments to  the  individual  capitalization,  they  tell  you  there  is  no 
restriction  for  child  labor  down  South. 

And  in  the  North,  in  this  state,  the  Supreme  Court,  at  the 
request  of  the  Manufacturers'  Voluntary  Association,  has  declared 
that  an  individual  employer  may  drive  the  hardest  bargain  with 
a  starving  woman  or  girl,  and  work  her  twelve  or  twenty-four 
hours  for  a  day's  work  and  pay  50  or  75  cents  as  compensation, 
and  that  all  laws  that  interfere  with  this  "right"  of  the  indi- 
vidual employer  are  unconstitutional. 

In  the  face  of  such  a  record  as  this,  you  individual  employers 
and  business  men  come  here  and  pose  as  champions  of  liberty, 
guardians  of  manhood,  and  saviors  of  society. 

The  corporation  is  a  legal  personality,  but  it  has  no  soul;  the 
trust  has  neither  personality  nor  soul,  but  soulless  as  the  first  is, 
and  bodyless  and  soulless  as  the  trust  is,  it  is  utterly  impossible  for 
either  or  both  to  exceed  in  inhuman  cruelty  the  record  you  indi- 
vidual employers  and  individual  business  men  have  already  made. 

We  have  been  regaled  here  with  delightful  descriptions  of  the 
vast  natural  resources  of  the  particular  states  from  which  the 

820 


respective  speakers  hailed,  others  have  attempted  to  picture  in 
words  the  creative  forces  of  machinery,  steam,  electricity,  har- 
nessed and  operated  by  the  "dignified"  millions  of  American 
workmen,  and  of  the  enormous  wealth  which  has  and  can  be  pro- 
duced. You  all  agree  that  if  as  yet  America  may  not  be  able  to 
feed,  clothe,  and  house  the  world  it  certainly  is  able  to  do  more 
than  that  for  its  own  people.  In  other  words,  if  we  but  look  about 
us  at  our  bursting  granaries  and  warehouses,  and  our  productive 
power,  we  must  see  that  the  problem  of  production  has  been 
solved,  and  that  not  one  single  human  being  in  this  land  need 
suffer  for  lack  of  the  necessaries,  comforts,  and  even  luxuries  of 
life,  because  of  any  inability  to  produce  them. 

And  yet,  plain  as  this  is,  it  is  still  more  plainly  seen  that  want, 
gaunt  and  dreadful,  ever  stalks  beside  millions  of  our  American 
workmen,  and  that  the  shadow  of  this  monster  of  modern  civiliza- 
tion is  now  spreading  over  the  great  middle  class. 

We  socialists  clearly  see  that  as  the  little  workshop  and  small 
factory  and  mill  had  'to  give  place  to  the  larger  and  larger  manu- 
facturing institutions,  .so  the  little  business  is  absorbed  by  the 
ever  increasing  corporations,  and  they  in  turn  into  trusts,  and  the 
many  trusts  into  still  larger  and  fewer  trusts,  till  it  requires  no 
prophetic  eye  to  see  the  form  of  the  one  all  absorbing  and  con- 
trolling trust.  Cannot  you,  business  men,  see  with  the  socialist 
in  this  inevitable  line  of  development  of  the  private  ownership  of 
the  earth — -the  means  of  production  and  distribution — the  end 
of  the  principle  of  private  property? 

The  fetich  of  private  property  in  the  mines,  in  the  soil,  in  the 
forests,  and  in  the  fields,  and  everywhere  else^  an  idolatrous 
worship  of  the  millions  of  propertyless  workers  as  well  as  of 
the  propertied  classes,  is  the  bane  of  civilization,  is  the  illusion  of 
civilization,  and  must  be  wiped  out  of  the  intellect.  We  social- 
ists rejoice  that  the  trust  has  come  to  show  you  that  the  logical 
sequence  of  the  ownership  and  control  of  what  is  now  known  as 
private  property  and  the  resources  of  the  earth,  that  the  private 
property  of  this  great  country  and  others  like  it,  will  be  organ- 
ized into  trusts  until  there  will  be  one  trust,  and  you^  will  not  be 
in  it. 

You  can  send  bands  of  music  to  your  legislatures,  you  can  pass 
resolutions,  you  can  hold  your  demonstrations  everywhere;  but 
the  concentration  of  private  property,  the  right  of  man  to  own 
all  he  can  get  and  hold  all  he  gets,  will  go  on  with  irresistible 
force  so  long  as  the  principle  of  private  property  in  the  things  by 
which  we  live  is  maintained  by  you  men. 

It  is  very  interesting  and  somewhat  amusing  to  the  socialist 

321 


to  watch  your  actions  as  you  feel  this  resistless  pressure  you  try  to 
escape  in  every  conceivable  way  but  cannot,  and  this  conference 
proves  beyond  a  doubt  that  as  a  class  you  are  in  great  distress — 
are  very  sick — and  we,  socialists,  seek  to  comfort  you  by  the  asser- 
tion that  the  disease  which  afflicts  you  is  fatal,  that  in  the  very 
near  future  you  will  die,  and  we  shall  be  present  and  rejoice  at 
your  funeral. 

With  this  condition  confronting  you,  with  this  outlook  before 
you,  will  not  you  business  men  look  above  the  present  system  of 
production  for  profit  and  consider  the  better  principle  of  produc- 
tion for  use? 

Will  you  still  continue  trying  to  tear  the  corporation  and  the 
trust  to  pieces,  so  that  each  of  you  individuals  may  have  a  little 
and  begin  again  in  the  "good  old  way,"  or  will  you  not  see  that 
these  great  trusts,  with  their  organized  methods  of  production  in 
which  all  waste  is  eliminated,  in  these  great  corporations  for  dis- 
tribution which  are  being  perfected,  a  means  to  be  used  and  not 
destroyed?  Will  you  not  see  that  with  these  perfected  mechani- 
cal methods  of  production  and  distribution,  the  mythical  "self- 
made-man,"  the  assumed  superiority  of  the  employing  and  busi- 
ness class  disappears  in  this  bodyless,  soulless  thing  called  a  trust, 
but  which  still  can  supply  all  the  necessaries,  comforts,  and  luxu- 
ries of  the  world? 

Will  you  not  see  with  the  socialist,  that  in  these  forms  of  com- 
bination the  warfare  of  competition  must  cease,  a  warfare  in 
which  man  is  at  war  with  man,  and  man  with  woman,  and  both 
with  the  child  in  every  place  of  industry  and  commerce  in  the 
world? 

Will  you  not  lift  your  eyes,  your  thoughts,  your  aspirations 
from  the  low  groveling  plane  of  inhuman,  stupid  warfare  in 
which  the  prize  for  you  is  profit  and  the  prize  for  the  worker  at 
best  only  a  "living  wage"  ? 

Will  you  not  lift  your  heads  and  hearts  above  this  and  realize 
that  in  the  higher,  peaceful  relations  of  fraternal  co-operation 
you  must  seek  and  will  find  that  commonwealth  in  which  alone 
the  people  rule,  in  which  alone  there  can  be  liberty,  in  which 
alone  there  can  be  manhood;  manhood  which  can  exist  only  in  a 
state  where  the  trust  perfected  includes  the  whole  people,  where 
private  property  which  once  belonged  to  the  individual  em- 
ployer and  business  man,  next  to  the  corporation,  and  last  to  the 
trust,  has  become  in  the  very  nature  of  things  the  common  prop- 
erty of  the  common  people,  and  makes  the  commonwealth  a  fact 
instead  of  a  mere  abstraction? 


822 


HENKY  WHITE. 

General  Secretary  United  Garment  Workers  of  America. 

Henry  White,  of  New  York,  general  secretary  of  the  United 
Garment  Workers  of  America,  was  next  introduced  and  said : 

The  industrial  combination  known  as  trusts  have  so  en- 
trenched themselves  in  our  economic  system,  that  it  is  not  so 
much  a  question  now  as  to  how  they  can  be  suppressed,  but  what 
the  public  attitude  should  be  toward  them,  and  whether  or  how 
they  should  be  regulated  for  the  public  benefit.  They  are  already 
a  phase  of  our  industrial  development,  and  being  here  have  at 
least  some  presumption  in  their  favor,  but  they  are  not  yet  suffi- 
ciently established  to  give  them  the  sanction  of  time  and  experi- 
ence. They  have  just  forced  their  way  into  the  arena  of  public 
activity.  The  benefits  derived  by  the  community  from  them 
still  requires  demonstration,  likewise  adequate  proof  as  to  the 
dangers  attending  their  existence.  Simply  citing  cases  showing 
abuses  is  no  indictment  against  the  method  itself.  We  must  dis- 
tinguish between  the  use  and  abuse  of  a  thing,  otherwise  no 
human  institution  could  stand.  Discrimination  is  the  soul  of  an 
argument.  While  pointing  out  the  evils  of  trusts  we  must  not 
forget  the  serious  grievances  of  competitive  business — its  limita- 
tions, its  wastes,  its  uncertainties.  Workingmen  are  only  top 
familiar  with  the  disheartening  reply  when  asking  for  an  increase 
of  wages,  "Can't  afford  it  on  account  of  competition."  The  trust 
method,  at  least,  changes  that  situation  as  far  as  ability  to  con- 
cede better  conditions  are  concerned. 

If  the  success  of  the  trusts  has  been  to  the  detriment  of  the 
people  society,  always  supreme,  can  harass  it,  tax  away  its  profits 
and  even  outlaw  it,  but  as  to  whether  it  can  be  destroyed  under 
a  system  of  private  enterprise  or  whether  society  can  prevent 
competing  concerns  from  consolidating  or  being  operated  under 
a  mutual  agreement  without  undoing  the  work  of  progress  and 
establishing  medieval  trade  restrictions,  that  is  the  question. 

National  incorporation,  if  that  were  possible  under  the  Con- 
stitution, suggests  a  way  of  uniformly  regulating  corporations,  by 
limiting  their  operations  to  the  definite  purpose  for  which  they 
are  chartered,  instead  of  the  unsatisfactory  state  regulation  which 
has  led  to  such  grotesque  results.  Government  ownership  and 
control  of  all  monopolized  industries  is  one  way  of  dealing  with 
the  subject,  but  we  are  not  evidently  prepared  to  seriously  con- 
sider so  vast  and  revolutionary  a  proposition,  there  being  nothing 
in  all  history  or  in  our  own  experience  to  support  it.  Society 

323 


cannot  be  moulded  at  will  to  fit  any  scheme  no  matter  How  well 
thought  out. 

The  real  reason  why  trusts  have  grown  so  wonderfully  in  this 
country  is  really  due  to  the  American  genius  for  doing  things 
upon  a  large  scale,  and  putting  natural  forces  to  the  best  use. 
Favored  legislation,  tariffs,  discriminating  railroad  rates,  or  the 
many  other  things,  commonly  ascribed  as  being  the  cause  of 
their  growth,  reminds  me  very  much  of  the  fly  upon  the  wheel, 
which  exclaimed,  "How  fast  I  am  making  it  turn."  These  things 
may  accelerate  their  development  and  enable  them  to  exact  undue 
profits,  but  they  do  not  account  for  the  phenomena  itself.  It  is 
Yankee  enterprise  rather  which  quickly  utilized  the  advantages 
which  centralization  gives  just  as  it  applied  electric  energy  im- 
mediately after  its  secrets  were  known.  We  frequently  hear 
men  of  business  experience  expressing  themselves  disparingly 
upon  this  subject  as  though  the  well  established  law  of  trade,  viz. : 
that  money  for  investment  will  flow  in  the  direction  of  the  most 
profit  and  greatest  security  had  ceased  to  operate  and  that  the 
trusts  charged  with  exacting  exorbitant  profits  had  preempted 
all  claims  and  forestalled  the  formation  of  rival  corporations. 
Can  it  be  that  the  spirit  of  rivalry  has  ceased  to  assert  itself?  Is 
it  not  more  likely  to  do  so  in  another  form  through  competition 
between  great  combinations?  As  soon  as  present  industrial  ten- 
dencies have  evolved  from  the  present  formative  state  there  can 
be  no  doubt  that,  that  force  in  business  which  has  never  failed 
will  be  made  manifest.  In  a  fair  free  field  would  not  superior 
service  more  likely  be  the  only  means  by  which  a  corporation 
could  continue  to  dominate  the  market?  Where  a  monopoly  is 
supported  by  the  obtaining  of  favored  freight  rates,  legislative 
privileges,  patent  rights,  or  the  tariff,  this  beneficent  process 
would  be  hampered  or  even  counteracted  and  all  of  our  energies 
therefore  should  be  directed  toward  removing  such  impediments 
instead  of  vainly  striving  to  prevent  the  natural  and  inevitable 
movement  toward  concentration.  This  is  the  pith  of  the  whole 
question. 

That  the  tariff  in  some  cases  enables  a  combination  in  control 
of  a  product  to  put  up  the  price  based  upon  the  difference  in  the 
customs  duty,  there  can  be  no  question.  I  mention  as  an  in- 
stance the  case  of  woolen  cloth.  Where  a  monopoly  is  due  to  the 
control  of  a  necessary  invention  it  is  improbable  that  inventive 
genius  will  have  exhausted  its  resources,  and  that  such  a  mo- 
nopoty  will  be  long  continued.  In  America  competition  has 
reached  a  condition  of  intensity  unknown  anywhere  else.  Every 
device  of  a  fertile  and  ingenious  people  is  resorted  to  in  order  to 


324 


enable  one  rival  to  obtain  an  advantage  over  another,  and  the 
principal  weapon  used  is  the  cutting  of  prices.  Instances  can  be 
cited  where  production  has  been  carried  on  in  some  large  indus- 
tries at  practically  no  profit,  simply  with  the  hope  that  conditions 
would  improve  and  because  of  the  inability  to  withdraw  invested 
capital.  Against  such  destructive  warfare,  combination  has  come 
as  a  relief.  This  tendency  is  but  the  fruition  of  such  competition. 
While  in  the  very  nature  of  things  competition,,  under  private 
enterprise,  cannot  be  avoided,  in  the  long  run  it  can  at  least  be 
carried  on  in  a  form  other  than  in  the  ruinous  way. 

"While  this  evolution  continues  there  are  some  important  in- 
dustries which  escape  this  tendency.  I  refer,  for  instance,  to 
the  clothing  trade  which  I  am  identified  with,  where  manufac- 
turing can  be  carried  on  just  as  cheaply  upon  a  small  scale  as 
upon  a  large  one.  To  this  is  due  the  sweating  system  which  is 
a  survival  of  the  old  domestic  workshop  method  transplanted 
from  Europe,  fed  by  immigration,  and  exploited  by  American 
capital.  The  sweatshop  has  managed,  therefore,  to  prevent 
that  industry  from  drifting  into  the  ways  of  the  trust. 
Our  trade  is  even  denied  the  privilege  of  choosing  between  a  real 
evil  and  a  possible  one.  In  the  clothing  trade  free  competition 
of  a  certain  kind  has  reached  its  last  ditch  and  any  change  would 
be  gladly  welcomed  as  an  improvement.  This  is  the  sort  of  free 
competition  which  follows  the  throwing  of  a  bone  among  hungry 
animals.  There  is  a  competition  to  emulate,  to  excel,  to  build  up, 
and  another  which  devours  and  destroys. 

On  the  problem  itself  I  confess  I  have  formed  no  positive  con- 
victions, because  of  the  suddenness  in  which  this  industrial  reor- 
ganization has  come  upon  us  and  the  difficulty  of  grasping  its 
true  meaning.  I  have,  however,  a  few  fundamental  questions  to 
ask  in  the  course  of  my  address,  which  require  a  convincing 
answer  in  order  that  public  alarm  may  be  allayed  that  the  trust 
institution  may  establish  itself  in  the  public  confidence,  prove 
that  it  is  necessary  to  progress,  show  that  it  widens  the  sphere  of 
human  endeavor  and  adds  to  the  happiness  of  rtiankind.  The 
opposition  to  trusts,  it  is  claimed  by  them,  is  due  to  the  incidental 
but  temporary  disarrangement  and  that  this  opposition  is  similar 
to  the  antipathy  manifested  toward  improved  machinery  and  bet- 
ter business  methods.  Their  advocates  claim  the  following  ad- 
vantages for  them : 

That  it  gives  the  consumer  the  benefit  of  increased  economy 
in  production  by  lowering  prices  and  by  which  consumption  is 
increased.  That  it  makes  employment  more  regular  and  enables 
higher  wages  to  be  paid.  That  it  creates  more  certainty  and  sys- 

325 


tern  in  business,  thus  making  panics  less  likely.  That  it  opens 
up  foreign  markets  on  account  of  the  superior  productive 
methods. 

Now  if  the  soundness  of  all  these  claims  be  admitted,  and 
there  are  no  serious  evils,  associated  with  the  trust,  then  it  ought 
to-be  hailed  as  a  benefactor  of  mankind  for  it  brings  results  com- 
pared with  which  all  other  improvements  in  human  history  be- 
come as  naught.  But,  alas,  for  the  ungrateful  public.  It  can 
only  see  the  forked  tongue  and  gleaming  eyes  of  a  monster. 

This  deep-rooted  antagonism  cannot  be  solely  attributed  to 
the  squeezing  out  of  the  middlemen,  the  displacement  of  labor  or 
the  work  of  the  alarmist,  but  if  analyzed  is  found  to  be  due  to 
the  fear  that  these  great  financial  institutions  are  establishing 
an  irresponsible,  impersonal  and  selfish  despotism.  That  this 
power  tends  to  control  legislation,  that  it  reaches  out  for  public 
franchises  by  special  privileges  and  so  intrenches  itself  that  it  can 
successfully  keep  out  competitors. 

Now,  to  what  extent  is  this  so  ?  And  is  there  some  compensat- 
ing or  balancing  power  in  society?  An  active  public  opinion 
must,  of  course,  be  always  relied  upon  to  remedy  abuses,  but  it  is 
roughly  formed  and  proverbially  slow,  and  is  frequently  thwarted 
by  the  compactly  organized  few.  History  has  some  warning  to 
give  in  this  regard,  and  surely  those  who  control  great  wealth 
have  not  usually  acted  as  though  they  were  its  steward.  Have  we 
been  encouraged  into  believing  that  the  trust  managers  will  use 
their  power  for  good,  rather  than  for  evil  ? 

Is  it  possible  for  a  trust  to  keep  in  control  only  so  -long  as 
prices  are  kept  down  to  a  point  which  would  shut  out  competi- 
tion? Numerous  cases  can  no  doubt  be  cited,  if  the  current 
newspaper  reports  can  be  credited,  where  prices  keep  going  u£ 
and  the  trust  holds  the  fort.  Are  such  cases  isolated  and  due  to 
the  general  advance  in  prices  and  have  no  bearing  upon  the  larger 
results,  or  do  they  indicate  the  real  character  of  the  trusts  and 
what  we  may  anticipate  from  them? 

On  this  serious  problem,  where  does  labor  stand?  I  have 
been  invited  to  speak  from  the  point  of  view  of  the  wage  earners, 
or  rather,  the  organized  portion  of  them,  for  the  unorganized 
have  no  voice,  and  like  "the  man  with  the  hoe/'  have  always 
been  mute. 

I  feel  justified  in  saying  that  the  general  attitude  of  the  trade 
unions  toward  the  industrial  corporations  is  neither  trust  nor 
anti-trust.  They  have  a  position  of  their  own.  They  are  not 
making  any  leaps  in  the  dark.  Hard  experience  has  taught  them 
caution.  Trade  unions,  the  creation  of  modern  social  evolu- 

326 


tion,  have  no  quarrel  with  the  progressive  forces  in  society,  but 
they  demand  for  the  workers  a  share  in  the  benefits. 

While  organized  workingmen  may  disagree,  somewhat  on  the 
general  question,  they  agree  in  this,  that  improved  means  of  pro- 
tection is  more  vital  to  them  than  improved  methods  of  produc- 
tion, as  important  as  the  latter  is.  They  want  some  say  as  to  the 
terms  of  employment.  Even  though  the  trusts  may  concede 
higher  wages  and  shorter  hours,  it  is  the  recognition  of  the  right 
to  make  terms  through  the  agency  of  the  union  that  concerns 
them  most.  Employers  will  often  voluntarily  grant  concessions 
as  a  means  of  offsetting  the  demand  for  recognition,  knowing 
that  such  recognition  would  enable  the  men  to  deal  with  the 
employer  more  like  an  equal.  Will  it  be  the  policy  of  these  cor- 
porations to  recognize  the  function  which  organized  labor  ful- 
fills in  society  and  treat  with  them  as  such?  Or,  will  they  deny 
to  the  workers  advantages  which  they  themselves  enjoy?  Will 
they  insist  upon  ignoring  the  necessity  of  workingmen  acting  in 
groups  in  view  of  the  impossibility  of  the  individual  making  sat- 
isfactory terms  of  employment  in  a  great  factory,  where  uniform 
conditions  are  fixed? 

What  will  the  policy  be  toward  united  labor  when  the  trusts 
are  more  fully  established  ?  Will  the  unions  have  to  meet  a  more 
unyielding  foe?  That  is  the  question  which  a  million  organized 
mechanics  are  asking  and  an  assuring  answer  cannot  be  given  by 
words  alone.  It  might  be  said  that  necessity  would  stimulate  and 
strengthen  the  movement  of  the  workers,  and  no  doubt  it  will, 
because  years  of  struggle  and  sacrifice  made  for  economic  inde- 
pendence have  trained  and  nerved  the  American  toiler  for  a 
greater  trial  and  the  test  must  soon  come,  for  the  organization  on 
the  other  side  is  proceeding  at  such  a  pace  that  labor  will  have  to 
make  great  strides  in  order  to  catch  up.  To  meet  one  single 
employer  who  speaks  for  the  entire  trade  is  quite  different  than 
coping  with  one  who  figures  on  the  advantage  his  competitor 
will  gain  in  the  event  of  a  strike. 

Now,  suppose  the  unions  are  overcome  and  destroyed.  In- 
stead of  the  natural  and  orderly  methods  of  trade  unionism  the 
discontent  would  express  itself  through  wild  and  revolutionary 
uprisings,  or  it  might  give  way  to  a  dull  deadening  passiveness, 
the  very  worst  fate  which  could  befall  society.  Professor  Brooks 
has  well  said:  "If  the  growth  of  the  trust  would  end  in  the 
crushing  of  the  unions,  it  would  be  a  great  human  tragedy." 
Trade  unions  have  often  been  likened  to  trusts.  True,  they  are 
alike  in  respect  to  the  features  of  organization  and  the  desire  to 
eliminate  a  detrimental  competition;  but  they  differ  in  this,  that 

827 


trade  unions  depend  for  effectiveness  upon  admitting  all  crafts- 
men to  membership;  they  enjoy  no  privileges  and  represent  the 
movement  of  the  mass  for  economic  justice  and  social  advance- 
ment. 

The  whole  purpose  of  the  human  race  is  not  alone  to  produce 
goods  cheaper.  A  visitor  to  a  great  factory  may  be  delighted 
with  the  order  and.  system  which  he  observes,  but  when  he 
mingles  with  the  workmen  he  often  finds  them  sullen  and  discon- 
tented. True  prosperity  is  not  so  much  a  question  of  superior 
production  as  that  of  more  equitable  conditions.  In  that  I  agree 
with  the  delegate  from  Texas,  but  there  is  no  occasion  at  the  same 
time  to  ignore  social  growth  and  change.  The  essence  of  civil- 
ization is  the  doing  of  justice  and  a  nation's  standing  must  be 
measured  by  its  ability  to  administer  justice,  likewise  with  a  sys- 
tem of  industry.  The  element  of  fair  dealing  must  always  be 
paramount  or  its  fruits  will  become  like  dead  sea  apples,  sour  and 
bitter  to  the  taste. 

The  golden  age  of  labor  is  supposed  to  have  been  in  the 
fifteenth  century.  Gibbons,  in  his  work  on  "The  Industrial 
History  of  England,"  says:  "The  cost  of  living  was  not  more 
than  one-tenth  of  that  at  the  present  day.  Food  was  abundant 
and  cheap.  Three  pounds  of  beef  could  be  bought  for  a  penny. 
A  pig  cost  about  four  pence.  Employment  was  fairly  constant 
and  regular,  and  in  addition  to  their  wages  the  laborers  still 
possessed  valuable  old  manorial  rights  to  common  pasture  and 
forests.  Artisans  earned  about  three  shillings  a  week,  which 
should  certainly  be"  worth  more  than  thirty  shillings  a  week  at 
the  present.  Industry  was  organized  into  craft  guilds" — a  form 
of  trade  unionism. 

Yet,  this  was  in  a  state  of  primitive  industry,  in  the  days  of 
the  domestic  handicrafts,  and  was  alone  made  possible  by  the 
social  harmony  which  prevailed,  when  the  master  and  journey- 
man met  in  common  fellowship.  "With  that  kind  of  harmony 
combined  with  the  economic  effectiveness,  which  the  trust  makes 
possible,  the  human  race  would  advance  with  mighty  bounds. 
The  trust  managers  have  magnificent  opportunities;  will  they 
avail  themselves  of  them?  Will  they  show  the  necessary  large- 
mindedness?  Judging  by  our  knowledge  of  human  nature,  which 
we  know  has  not  changed  perceptively  for  a  thousand  years  under 
varying  conditions,  we  have  reason  to  be  anxious,  but  the  people 
of  America  have  never  failed  to  successfully  meet  a  great  issue 
when  once  they  grappled  with  it.  The  vigorous  manner  in 
which  the  trusts  were  opposed  here  but  indicates  the  feeling  out- 


328 


A.  M.  COMPTON 
DAVID  ROSS 
WILLIAM  H.  TUTTLE 


HENRY  D.  BAKER 
GEORGE  A.  SCHILLING 
PAUL  J.  MAAS 


side  and  with  such  sentiments  aroused  no  possible  power  can  pre- 
vail against  the  people's  might. 

In  the  lowering  clouds  of  social  strife  I  see  a  welcome  light. 
The  mere  fact  alone  of  such  a  gathering  as  this  shows  that  the 
age  of  reason  is  dawning,  and  when  men  reason  everything  is 
possible. 

Other  speakers  of  the  morning  were,  M.  M.  Garland,  former 
president  of  the  Amalgamated  Iron  and  Steel  Workers;  Samuel 
Gompers,  president  of  the  American  Federation  of  Labor,  and 
John  W.  Hayes,  secretary  and  treasurer  of  the  Knights  of  Labor. 
The  latter  remarked  that  as  some  of  those  who  had  been  assigned 
to  talk  on  the  side  of  labor  were  not  present,  he  felt  that  he  should 
be  accorded  more  time  than  that  allotted  other  speakers. 

"Cockran  moved  unanimous  consent  to  an  extension  of  the 
speaker's  time.  Mr.  Hayes  declined  to  accept  an  extension  as  a 
concession.  He  demanded  it  as  a  right.  There  was  confusion  in 
the  galleries,  and  without  any  formalities,  the  chair  closed  the 
incident  by  intimating  to  Mr.  Hayes  that  he  would  probably  find 
the  ruling  in  his  case  sufficiently  elastic. 

SAMUEL  GOMPEKS. 

President  American  Federation  of  Labor. 

Mr.  Gompers'  subject  was  "The  Control  of  Trusts."  He 
said  in  part : 

We  are  all  conscious  of  the  giant  strides  with  which  industry 
during  the  past  decade  has  combined  and  concentrated  into  the 
modern  trust.  There  is  considerable  difference  of  opinion,  how- 
ever, as  to  what  is  regarded  by  many  as  an  intolerable  evil. 

Organized  labor  is  deeply  concerned  regarding  the  "swift  and 
intense  concentration  of  the  industries,"  and  realizes  that  unless 
successfully  confronted  by  an  equal  or  superior  power  there  is 
economic  danger  and  political  subjugation  in  store  for  all. 

But  organized  labor  looks  with  apprehension  at  the  many 
panaceas  and  remedies  offered  by  theorists  to  curb  the  growth  and 
development  or  destroy  the  combinations  of  industry.  We  have 
seen  those  who  know  little  of  statecraft  and  less  of  economics  urge 
the  adoption  of  laws  to  "regulate"  interstate  commerce  and  laws 
to  "prevent"  combinations  and  trusts,  and  we  have  also  seen  that 

*  329 


these  measures,  when  enacted,  have  been  the  very  instruments 
employed  to  deprive  labor  of  the  benefit  of  organized  effort  while 
at  the  same  time  they  have  simply  proven  incentives  to  more 
subtly  and  surely  lubricate  the  wheels  of  capital's  combination. 

For  our  part,  we  are  convinced  that  the  state  is  not  capable 
of  preventing  the  legitimate  development  or  natural  concentra- 
tion of  industry.  All  the  propositions  to  do  so  which  have  come 
under  our  observation  would  beyond  doubt  react  with  greater 
force  and  injury  upon  the  working  people  of  our  country  than 
upon  the  trusts. 

The  great  wrongs  attributable  to  the  trusts  are  their  cor- 
rupting influence  on  the  politics  of  the  country,  but  as  the  state 
has  always  been  the  representative  of  the  wealth  possessors  we 
shall  be  compelled  to  endure  this  evil  until  the  toilers  are  organ- 
ized and  educated  to  the  degree  when  they  shall  know  that  the 
state  is  by  right  theirs,  and  finally  and  justly  come  to  their  own 
while  never  relaxing  in  their  efforts  to  secure  the  very  best  possi- 
ble economic,  social  and  material  improvement  in  their  condition. 

There  is  no  tenderer  or  more  vulnerable  spot  in  the  anatomy 
of  trusts  than  their  dividend  paying  function,  there  is  no  power 
on  earth  other  than  the  trade  unions  which  wields  so  potent  a 
weapon  to  penetrate,  disrupt,  and,  if  necessary,  crumble  the  whole 
fabric.  This,  however,  will  not  be  necessary,  nor  will  it  occur,  for 
the  trade  unions  will  go  on  organizing,  agitating  and  educating,  in 
order  that  material  improvement  may  keep  pace  with  industrial 
development,  until  the  time  when  the  workers,  who  will  then 
form  nearly  the  whole  people,  develop  their  ability  to  administer 
the  functions  of  government  in  the  interest  of  all. 

There  will  be  no  cataclysm,  but.  a  transition  so  gentle  that 
most  men  will  wonder  how  it  all  happened. 

In  the  early  days  of  our  modern  capitalist  system,  when  the 
individual  employer  was  the  rule  under  which  industry  was  con- 
ducted, the  individual  workmen  deemed  themselves  sufficiently 
capable  to  cope  for  their  rights;  when  industry  developed  and 
employers  formed  companies,  the  workmen  formed  unions;  when 
industry  concentrated  into  great  combinations,  the  workingmen 
formed  their  national  and  international  unions,  as  employments 
became  trustified,  the  toilers  organized  federations  of  all  unions — 
local,  national  and  international — such  as  the  American  Federa- 
tion of  Labor. 

We  shall  continue  to  organize  and  federate  the  grand  army  of 
labor,  and  with  our  mottoes,  lesser  hours  of  labor,  higher  wages, 
and  an  elevated  standard  of  life,  we  shall  establish  equal  and  exact 
justice  to  all.  "Labor  Omnia  Vincit." 

330 


JOHN  W.  HAYES. 

General  Secretary  and  Treasurer  Order  Knights  of  Labor. 

Mr.  Hayes,  speaking  on  "The  Social  Enemy,"  said : 

The  question  which  we  are  invited  here  to  discuss — "Trusts 
and  Combinations" — is  fast  pressing  itself  for  solution  before 
the  highest  tribunal  in  the  nation,  the  court  of  final  resort,  for 
all  questions  of  public  policy,  the  court  of  public  opinion.  It  is 
too  vital,  too  important,  to  be  confined  to  the  narrow  limits  of 
commercial  affairs,  of  mere  business  operation,  or  mercenary 
speculation.  It  touches  the  very  foundations  of  our  free  insti- 
tutions, involves  the  liberty  of  the  people,  the  comfort,  happi- 
ness and  prosperity  of  millions  of  free  men,  and  the  stability  of 
our  governmental  system,  established  by  the  fathers  to  defend 
and  protect  coming  generations  in  their  inherent  rights,  which 
rights  were  declared  by  them  to  be  the  gift  of  nature  to  all  her 
children. 

This  question,  then,  involves  more  than  the  trivial  matter  of 
production  and  prices.  It  goes  far  beyond  the  profitable  opera- 
tion of  the  manufacturer.  It  rises  to  the  high  plane  of  a  gov- 
ernment policy,  involves  the  question  of  human  rights,  of  indi- 
vidual liberty,  of  the  status  of  the  citizen,  of  the  dignity  of 
citizenship,  the  right  of  defense,  a  limit  to  the  power  of  wealth, 
a  point  at  which  the  encroachment  of  mercenary  greed  must 
stop,  and  a  barrier  created  that  will  enable  us  to  defend  our  lib- 
erties, our  manhood,  and  our  independence. 

.1  shall,  therefore,  discuss  this  question  only  as  it  bears  upon 
the  broad  field  of  human  rights,  and  deny  at  the  outset  the 
moral  right  of  any  individual,  or  combination  of  individuals,  to 
so  monopolize  any  natural  field  of  industry  to  such  an  extent 
as  to  be  able  to  dictate  the  conditions  which  govern  the  lives  of 
that  portion  of  society  which  gains  its  maintenance  by  the  exer- 
cise of  productive  industry  in  that  particular  field.  I  assert  that 
it  is  contrary  to  the  best  interests  of  society — indeed,  that  govern- 
ment has  not  the  constitutional  power  to  enact  such  legislation 
as  will  make  it  possible  for  any  combination  of  individuals  to  so 
limit  the  volume  of  production  in  any  natural  field  for  its  own 
particular  advantage,  or  so  create  conditions  that  any  individual 
or  combination  of  individuals  may  have  despotic  power  over  the 
lives  of  any  citizen  or  number  of  citizens.. 

I  further  assert  and  maintain  that  these  great  combinations 
are  an  assault  upon  the  inherent  and  constitutional  rights  of  the 
citizen,  and  that  the  real  and  vital  advantage  to  be  gained  is  the 

331 


despotic  control  over  labor.  Virtually  to  own  and  command 
the  labor  engaged  in  any  particular  field,  and  consequently  it 
is  an  assault  upon  that  portion  of  the  people.  If  one  field  may 
be  invaded  and  reduced  to  despotic  dictation,  all  may  be,  and 
the  logical  outcome  must  be  the  conquest  of  all  fields  of  produc- 
tion, the  establishment  of  a  despotism  in  each,  the  enslavement 
of  the  people,  the  overthrow  of  our  free  institutions,  and  the  erec- 
tion of  moneyed  aristocracy.  Thus  would  our  boasted  free  insti- 
tutions become  a  fraud  and  a  pretense,  our  government  perverted, 
and  only  used  as  a  machine  to  enforce  the  will  of  the  dictators. 

The  term  "trust"  is  so  indefinite,  so  vague  and  uncertain, 
being  used  many  times  without  a  clear  conception  of  its  scope 
or  exact  reference,  that  we  must  secure  a  definition  for  it.  Web- 
ster defines  a  trust  to  be  "a  combination  to  control  production  and 
prices."  This  definition  furnishes  us  with  sufficient  grounds 
to  attack  them  constitutionally,  as  the  control  of  production  in- 
volves our  inherent  rights;  the  liberty  of  our  citizens — in  fact, 
the  very  existence  of  our  form  of  government.  Not  only  does 
the  trust  dominate  and  control  production  and  prices,  but  it 
controls  and  cuts  off  our  opportunity  to  labor,  which  is  one  of 
our  inherent  rights,  and  thus  the  very  right  to  live  is  denied  us, 
or  we  are  doomed  to  involuntary  servitude  for  the  benefit  of  a 
more  favored  class.  This,  you  see,  places  the  question  beyond 
the  profitable  operation  of  the  manufacturer  and  raises  one  of 
equity,  of  justice,  and  of  the  rights  of  man.  An  analysis  of  the 
character  and  objects  of  the  trust  cannot  but  convince  any  un- 
biased and  patriotic  mind  that  they  are  inimical  to  our  popular 
form  of  government,  subversive  of  our  institutions,  tyrannical  in 
their  methods,  antagonistic  to  the  common  welfare,  the  common 
enemy  of  society,  and  should  be  treated  as  an  invader  or  armed 
revolutionist  aspiring  to  dictatorial  power.  Arms  are  not  the 
only  resort  of  the  invader,  the  despot,  or  the  conqueror.  Vio- 
lence is  not  the  only  means  of  making  conquests  and  enslaving 
the  people,  and  it  can  be  proven  beyond  any  question  of  doubt 
that  the  methods  of  the  trusts  are  the  methods  of  the  invader, 
the  conqueror,  and  the  despot,  and  the  ends  to  be  accomplished 
by  the  instigators  of  the  trusts  are  exactly  those  intended  to  be 
accomplished  by  arms  directed  by  military  genius.  Taking  this 
view  of  the  trusts,  which  I  hold  is  the  correct  one,  I  assert  boldly 
that  they  are  the  enemies  of  society,  and  as  such  should  be  de- 
stroyed as  any  common  enemy,  and  that  the  financial  phase  of  the 
question  should  not  come  into  the  subject  for  consideration,  as 
the  liberties  of  the  people  are  far  above  the  mere  question  of 
money. 

332 


The  definition  that  a  trust  is  an  aggressive  combination  of 
private  individuals  leads  naturally  to  the  inquiry,  against  what 
or  whom  this  aggression  or  assault  is  to  be  directed?  Is  it  an 
organization  of  private  individuals  formed  to  attack 'some  similar 
organization  in  a  competitive  rivalry,  the  result  of  which  will 
affect  the  private  interests  of  those  immediately  concerned, 
leaving  the  unsuccessful  and  unfortunate,  the  ability  to  recover 
from  any  injuries  they  might  suffer  from  the  contest,  with  their 
social  status  unaffected  and  their  capacity  and  ability  to  produce 
unimpaired?  Or  is  it  possible  that  this  aggression  is  against 
society,  against  the  established  social  and  political  conditions, 
which  guarantees  to  every  citizen  the  right  and  opportunity  to 
labor  in  any  field  of  industry  he  may  find  most  favorable  to  his 
pursuit  of  happiness  and  the  enjoyment  of  his  liberty?  What 
more  nearly  concerns  the  happiness  of  man  than  the  enjoyment 
of  the  full  return  of  his  industry,  or  his  liberty,  more  than  the 
access  to  any  field  of  industry  nature  has  provided,  from  which 
he  may  gather  the  necessities  and  comforts  which  minister  to 
his  happiness  and  the  happiness  of  those  depending  upon  him? 
It  is  the  duty  of  society  and  government  to  foster  and  encour- 
age production,  to  guard  every  field  of  industry  for  the  common 
good  of  society,  and  to  develop  the  producing  energy  to  the  great- 
est extent  possible. 

There  is  no  fear  that  a  people  can  produce  too  much  of  any- 
thing that  is  serviceable  and  useful  to  the  community;  that  the 
people  can  become  too  comfortable  or  too  industrious.  The  good 
of  society  demands  that  the  productive  energy  be  developed  to 
the  greatest  degree  possible;  that  the  fields  of  industry  be  not 
circumscribed,  and  that  free  access  be  guaranteed  and  preserved 
to  all  who  require  or  desire  to  exercise  their  productive  labor  in 
such  fields.  The  controlling  of  any  field  of  industry  by  any  indi- 
vidual or  combination  of  individuals  is  contrary  to  the  declared 
spirit  of  our  institutions,  for  it  recognizes  the  power  of  such  indi- 
vidual or  combination  to  restrict  production,  even  to  absolutely 
close  the  field  of  opportunity  against  the  citizen,  if  they  consider 
their  personal  interests  will  be  benefited  thereby. 

The  great  corporations,  the  trusts,  with  their  capital,  their 
machinery,  special  privileges,  and  other  advantages,  are  over- 
whelming the  individual,  reducing  him  to  the  condition  of  a 
mere  tool,  to  be  used  in  their  great  undertakings  for  their  indi- 
vidual profit,  and  of  no  more  consequence  than  a  piece  of  dumb 
machinery.  Man  is  the  slave  of  necessity,  and  he  who  controls 
the  necessities  has  the  power  of  a  despot.  The  first  and  prime 
necessity  is  the  opportunity  to  exercise  his  industry  in  some 


productive  field  where  he  can  secure  the  means  of  existence. 
To  close  this  field,  to  cut  off  this  opportunity,  is  to  sentence 
him  to  death.  To  restrict  the  exercise  of  his  productive  ability, 
or  limit  the  terms  of  his  access  to  the  opportunity  by  the  will  of 
another,  is  to  make  him  the  slave  of  another.  It  is  claimed  by 
short-sighted,  selfish,  and  mercenary  men  that  if  the  opportunity 
is  closed  in  one  field  there  are  others  to  which  the  individual 
may  turn.  This  is  too  silly  and  childish  an  assertion  to  merit 
notice.  First,  because  no  such  possibility  should  be  allowed  to 
exist  under  our  free  institutions ;  and  next,  because  were  it  pos- 
sible for  one  field  to  be  monopolized,  it  is  possible  for  all  to  be, 
and  the  individual  would  turn  from  the  field  closed  against  him 
to  find  all  others  in  the  same  condition.  Even  were  this  not 
so,  his  skill,  experience,  and  training  in  that  field  would  be  lost 
to  him,  and  he  would  enter  a  new  one  at  a  disadvantage  in  the 
competition  with  trained  minds  and  skilled  hands  already  em- 
ployed, and  an  injustice  would  be  done  on  the  one  hand,  and 
undue  favor  extended  on  the  other.  The  trust,  by  monopoliz- 
ing the  field,  becomes  the  dictator  of  the  conditions  which  gov- 
ern the  life  of  every  individual  engaged  in  the  field  monopolized. 
By  limiting  the  extent  to  which  he  may  exercise  his  productive 
energy,  limiting  his  wage,  or  the  possible  amount  of  his  earn- 
ings, it  dictates  the  quality  and  quantity  of  food  the  worker  may 
eat,  the  kind  of  clothes  he  may  wear,  the  kind  of  shelter  he  may 
provide  for  his  family,  the  opportunity  for  education  and  im- 
provement his  children  may  have,  and,  by  cutting  his  opportunity 
to  labor,  it  denies  him  even  the  right  to  live. 

The  great  danger  from  these  great  combinations  is  the  fact 
that  they  step  in  between  the  citizen  and  the  government  and 
levy  such  tribute  as  they  may  choose,  imposing  the  most  severe 
penalties  in  the  form  of  enforced  idleness,  destitution,  and  suf- 
fering for  refusal  to  comply  with  their  demands.  The  individ- 
ual is  thus  subjected  to  the  dominition  of  two  distinct  powers — 
the  one  the  political  government,  which  taxes  him  and  controls 
his  relations  to  his  fellow-citizens,  and  which  power  is  of  his 
own  creation  and  is  submitted  to  voluntarily;  the  other  con- 
trols the  necessities  by  which  he  exists,  and  only  by  permission 
of  the  combination  which  controls  his  field  of  industry  can  he 
exist  at  all.  This  latter  is,  in  its  nature,  compulsory,  and  is  only 
submitted  to  because  he  is  unable  to  resist  it.  In  this  sense  he  is 
a  slave. 

Each  field  of  industry  is  looked  to  to  supply  whatever  demand 
may  be  made  upon  it  by  the  necessities  of  the  people  not  only  of 
our  own  country,  but  throughout  the  world.  A  larger  demand 

334 


gives  greater  activity  to  such  industry  as  is  already  employed  and 
opportunity  to  such  energy  as  may  at  any  time  be  unemployed, 
the  supply  being  naturally  adjusted  to  the  demand  and  a  just  and 
equitable  return  made  to  the  producing  energy.  The  operation 
of  the  trust  interrupts  this  natural  adjustment,  arbitrarily  fixes 
the  volume  of  -production,  and  demands  whatever  price  necessity 
may  compel  the  unfortunate  consumer  to  pay,  and  thus  an  unjust 
tax  is  levied  upon  all  society  to  fill  the  purses  of  the  greedy  dic- 
tators, who  dole  out  whatever  pittance  they  may  choose  in  the 
form  of  wages  to  those  unfortunates  whose  labor  they  are  enabled 
to  command.  In  this  way  society  is  compelled  to  pay  tribute  to 
this  speculative  freebooter,  and  submit  to  his  dictation  as  to 
the  quality  and  quantity  of  whatever  product  he  controls  which 
its  necessities  may  demand. 

It  may  be  said  in  reply  that  this  is  never  done.  I  answer  that 
it  is  possible  it  may  be,  and  it  should  be  so  arranged  that  such  a 
thing  would  not  be  possible  in  any  civilized  society.  The  trust, 
then,  is  the  enemy  of  society,  as  well  as  of  the  individual. 

This  surely  is  enough  to  condemn  it,  for  whatever  is  the  enemy 
of  society  should  be  exterminated  without  thought  of  mercy  or 
charity.  But  the  trust  is  worse.  It  is  the  enemy  of  free  insti- 
tutions, a  breeder  of  treason  against  the  government,  involving 
the  overthrow  of  our  system  and  the  destruction  of  our  liberties. 
This  is  a  severe  charge,  but  it  is  capable  of  clear  and  undisputable 
proof. 

The  great  object  of  human  endeavor  is  the  achievement  of 
the  greatest  degree  of  human  happiness.  This  is  the  great  aim 
of  all  human  society,  all  human  governments;  and  this  is  the 
declared  and  recognized  purpose  for  which  our  free  institutions 
were  devised  and  established,  and  the  machinery  of  our  govern- 
ment was  designed  and  constructed  for  the  purpose  of  accom- 
plishing this  result  in  the  most  effective  manner.  By  preserving 
the  inherent  rights  and  liberties  of  the  individual  and  defending 
the  dignity  of  citizenship,  it  is  hoped  that  the  citizen  may  be  pro- 
tected from  the  tyranny  of  more  fortunate  individuals  and  classes, 
and  the  operation  of  unjust  conditions  and  influences  which  may 
assail  him,  and  he  be  left  untrammeled  in  his  pursuit  of  that  de- 
gree of  happiness  to  which  he  may  aspire. 

The  establishment  of  the  trust  reriders  impossible  this  pres- 
ervation and  defense,  because  it  transforms  the  citizen  into  a 
servile  dependent  upon  the  despotic  will  of  the  corporation, 
which  is  governed  only  by  mercenary  greed  and  selfish  desire, 
the  trust  becoming  in  its  very  nature  a  power  far  more  effective 
in  all  things  directly  pertaining  to  the  individual's  comfort  and 

'335 


happiness  than  the  government.  In  this  way  it  usurps  the  power 
of  government,  which  it  nullifies  and  overthrows,  and  so  far  as 
the  individual  affected  is  concerned,  assumes  the  functions  of 
government.  The  object  and  aim  of  the  trust  being  purely  mer- 
cenary and  selfish,  naturally  it  will  seek  to  establish  and  main- 
tain conditions  which  will  give  it  absolute  control  of  the  pro- 
ductive energy  employed  in  its  field,  regardless  of  the  rights  of 
individuals  or  the  common  welfare  of  society. 

The  legislation  enacted  by  the  government,  if  uninfluenced, 
naturally  would  be  the  expression  of  the  popular  will  in  the  in- 
terests of  individuals  and  society.  This  legislation  it  becomes  the 
interest  of  the  trust  to  influence  and  pervert  to  its  own  profit 
and  advantage.  This  opens  the  door  to  corruption  of  the  legis- 
lative branch  of  government  and  the  oppression  and  overawing 
of  the  popular  will.  The  representatives  of  the  people  are  cor- 
rupted, and  the  class  dependent  on  the  trust  for  its  employment 
and  maintenance  intimidated  and  practically  -disfranchised 
through  fear  of  loss  of  employment  and  enforced  idleness.  They 
are  compelled  to  support  the  methods  of  the  trust  or  neglect  to 
exercise  their  rights  as  citizens.  In  this  way  the  independence 
of  the  citizen  is  destroyed,  his  manhood  degraded,  his  right  to 
give  free  expression  to  his  opinions  upon  public  affairs  abridged. 
He  becomes  a  sycophant,  a  moral  coward,  a  helpless  dependent 
upon  the  will  of  his  master,  and  the  will  of  the  trusts  becomes  the 
only  voice  heard.  Legislation  in  this  way  becomes  merely  the 
dictation  of  the  trust,  and  the  pretense  that  it  is  the  emanation 
of  popular  will  is  false  and  fraudulent.  In  this  way  the  power 
and  machinery  of  government  are  gradually  transferred  from  the 
people  to  the  corporation,  and  that  which  was  founded  and  in- 
tended to  protect  the  citizen  and  defend  his  natural  and  civil 
rights  becomes  the  means  of  his  oppression.  This  is  unques- 
tionably treason,  a  conspiracy  to  usurp  and  pervert  the  govern- 
ment, to  overthrow  free  institutions,  and  to  establish  a  despotism 
and  a  favored  and  dominant  class,  practically  autocratic  in  its  use 
of  power.  That  this  is  not  only  possible,  but  practically  in  opera- 
tion at  the  present  time,  is  proven  by  the  history  of  our  political 
campaigns  for  the  past  two  decades,  and  a  review  of  the  legisla- 
tion enacted  in  the  interests  of  corporations,  which  constitute 
the  great  bulk  of  all  legislation,  municipal,  state,  and  national. 
It  is  universally  admitted  that  legislation  emanates  from  the  class 
benefited  by  it,  and,  looking  over  the  mass  of  legislation,  one  is 
at  no  loss  to  decide  what  class  is  benefited.  Therefore,  there  can 
be  no  doubt  as  to  what  influence  brought  about  its  enactment. 
The  fraud,  corruption,  and  bribery  of  legislatures,  the  open  de- 

336 


fiance  of  executive  authority,  the  corruption  of  courts  and  their 
officials,  the  usurpation  of  power  and  the  legal  assumption  of 
rights,  the  ready  appeal  to  the  military  and  arrogant  overriding 
of  the  civil  authority  by  this  power  in  controversies  between  cor- 
porations and  employes;  the  defiance  of  municipal  authorities  in 
questions  between  corporations  and  municipalities,  the  employ- 
ment of  armed  mercenaries  to  enforce  their  decrees,  the  con- 
stant and  never-ceasing  struggle  of  corporations  to  compel  as 
many  hours  of  labor  and  as  low  a  rate  of  wages  as  is  possible  to 
enforce,  are  all  clearly  indicative  of  the  character,  desires,  and 
purposes,  and  show  beyond  any  question  such  combinations  to 
be  the  enemies  of  society  and  of  any  form  of  government  which 
tends  to  abridge  or  control  their  power  over  the  citizen,  or  the 
exercise  of  their  will  in  any  undertaking  their  greed  and  avarice 
may  suggest,  regardless  of  the  rights,  interest,  liberties,  or  hap- 
piness of  the  people,  or  even  the  interests  of  the  people's  govern- 
ment. Their  intents  are  unquestionably  treasonable,  and  if  car- 
ried to  their  ultimate  results  will  certainly  cause  the  overthrow  of 
our  institutions  and  government. 

In  this  world  all  things  work  in  a  circle.  So  it  will  and  must 
be  with  trusts  if  carried  to  their  logical  culmination.  The  in- 
spiring motive  which  called  them  into  being  will  prove  their  de- 
struction, as  well  as  the  destruction  of  our  government.  They 
will  end  by  destroying  themselves,  as  well  as  the  government 
which  gave  them  birth.  The  very  nature  of  the  system  proves 
this. 

The  trust  being  an  aggressive  combination  for  purely  selfish 
objects,  attacks  the  individual,  and  by  overthrowing  his  natural 
rights  seizes  upon  his  field  of  opportunity  and  production,  appro- 
priating them  to  its  own  advantage.  This  field  having  been  con- 
quered, and  the  trust  strengthened  in  its  financial  power,  the 
aggressive  spirit  of  selfish  greed  looks  for  conquests  in  allied 
fields,  which  are  soon  invaded  and  monopolized,  or  other  com- 
binations, seeing  the  success  of  the  first  attempt,  enters  upon  the 
same  campaign  of  conquest.  Soon  the  individual  is  overwhelmed 
and  every  field  of  production  is  monopolized  by  a  trust.  Indi- 
vidual enterprise,  opportunity,  libertv,  and  individual  energy  are 
destroyed,  competition  for  the  individual  is  impossible,  and  the 
war  between  the  trusts  begins. 

The  strongest  combination  in  one  field  attacks  the  weaker  in 
allied  fields,  and  the  overthrow  and  absorption  of  this  strengthens 
the  victor  and  makes  further  conquest  possible,  which  finally 
ends  by  the  overthrow  of  all  opposition  and  the  monopolizing 
of  all  fields  of  production  by  one  colossal,  irresistible  combina- 

837 


tion,  instigated  by  mercenary  greed  and  utter  selfishness,  which 
will  issue  its  autocratic  decree  to  a  cringing  mass  of  dependent 
slaves,  whose  very  right  to  live  would  depend  upon  the  im- 
perial will  of  the  corporation,  which  would  hold  the  power  of 
life  and  death  over  its  subjects.  These  would  represent  the 
citizenship  of  the  pretended  republic  which  might  stand  for  the 
sham  of  civil  government,  for  should  even  a  pretense  remain,  the 
laws  enacted  would  be  merely  the  will  of  the  corporation.  But 
would  such  an  aggregation  of  power  and  wealth  be  content  to 
allow  even  a  pretense  of  its  subjection  to  any  recognized  author- 
ity? It  is  scarcely  reasonable  to  suppose,  but  it  is  far  more  prob- 
able that  all  sham  and  pretense  would  be  thrown  aside  and  the 
victor  openly  declare  his  power,  brush  aside  any  futile  opposi- 
tion, set  up  his  aristocracy,  and  free  institutions,  the  popular 
government  erected  by  patriotic  fathers,  would  disappear  from 
the  face  of  the  earth,  and  in  its  stead  would  arise  a  despot- 
ism born  of  greed  and  selfishness,  subservient  to  the  interests 
of  an  utterly  irresponsible  group  of  heartless  speculators,  ruling 
their  slaves  with  an  iron  hand  in  order  to  secure  to  themselves 
the  greatest  profit  and  advantage,  and  to  whom  the  common 
welfare  would  mean  only  their  own  mercenary  advancement. 
Besides  such  conditions  the  despotism  of  Russia  would  be  liberty, 
hereditary  monarchy  liberal,  the  condition  of  the  black  slave  of 
the  South  enjoyable.  No  more  deplorable  fate  could  possibly 
befall  any  people  than  that,  which  in  this  case  is  possible,  as  the 
logical  outcome  of  recognizing  this  heartless,  this  heathenish 
and  selfish  system. 

I  do  not  hesitate  to  proclaim  that  in  recognizing  it  at  all  we 
are  nourishing  a  serpent,  fostering  treason,  giving  aid  and  com- 
fort to  the  enemies  of  society,  welcoming  an  invader,  assisting 
in  the  overthrow  of  free  institutions  and  popular  government, 
inviting  a  dictator,  and  laying  the  foundation  of  despotism.  We 
are  sowing  the  seed  of  revolution  and  may  reap  the  harvest  upon 
the  bloody  fields  of  civil  strife  or  amid  the  groans  and  sighs  of 
fettered  slaves,  bereft  of  manhood,  wallowing  in  moral  degrada- 
tion, ignorance,  and  vice,  degraded  from  the  -exalted  dignity  of 
citizenship  in  a  free  and  mighty  nation  to  a  condition  of  syco- 
phantic dependence  upon  the  despotic  decree  of  an  autocrat. 

The  slums  of  Europe  have  been  raked  to  secure  a  horde  of 
the  most  ignorant,  the  most  servile,  the  most  depraved,  the 
lowest  element  of  the  most  oppressive  aristocracies  of  modern 
civilization,  and  these,  purchased  slaves,  dependents  upon  the 
will  of  an  autocrat,  without  even  the  rudiments  of  education, 
without  even  a  faint  conception  of  liberty  or  of  human  rights, 


with  no  conception  of  the  character  of  our  institutions  and  gov- 
ernment, have  been  injected  into  our  population  and  employed  in 
the  development  of  some  of  our  most  productive  fields,  where 
they  are  worked  under  conditions  almost  identical  with  those 
under  which  the  convicts  of  Siberia  exist,  conditions  which  no 
free  American  citizen  could  submit  to  and  no  man  worthy  of  cit- 
izenship should.  Thus  are  these  great  fields  of  industry,  the 
inheritance  of  American  children,  closed  against  our  own  people 
for  the  profit  of  a  few  speculators,  and  the  industry  in  these  fields 
ruled  despotically  by  force,  and  practically  a  system  of  slavery 
established. 

NOT  does  the  wrong  end  here.  This  mass  of  ignorance  and 
depravity  has  been  degenerating  for  centuries  under  the  most  in- 
iquitous tyranny,  and  cannot  by  any  means  hope  to  reach  the 
plane  of  intelligence  our  people  occupy.  They  submit  willingly 
and  with  no  sense  of  humiliation  to  methods  and  treatment  our 
own  people  would  not  brook,  and  thus  gradually  their  masters 
introduce  and  usurp  authority  similar  to  that  of  European  poten- 
tates, which,  being  accepted,  gradually  comes  to  be  looked  upon 
as  legitimate,  and  so  usurped  authority  comes  gradually  to  be 
recognized  as  legal,  and  our  government  the  executor  often  of 
the  will  of  the  corporation.  Further  than  this,  the  influence 
of  this  degraded  and  vicious  element  upon  our  own  population 
is  bad  in  the  extreme,  tending  to  degrade  and  lower  our  own 
citizens,  rather  than  to  elevate  those  too  dense  and  ignorant 
to  be  impressed  by  moral  influences.  The  result  is  rather  to 
Europeanize  our  own  people  than  to  Americanize  the  stolid  mass 
which  exists  under  such  degrading  influences. 

However,  it  is  plain  that  this  grand  inheritance  of  the  Ameri- 
can people,  these  great  fields  of  opportunity  and  production,  have 
been  closed  to  their  rightful  owners  and  absorbed  by  a  greedy 
few,  who  operate  them  with  foreign  labor  under  the  most  servile 
and  degrading  conditions. 

That  the  unrestricted  competition  of  centralized  wealth 
against  individual  enterprise  is  fatal  to  the  individual  and  against 
the  best  interests  of  society  is  further  proven  in  the  commercial 
field.  The  small  merchant  has  been  forced  into  the  position  of 
a  paid  servant  of  the  combination.  Formerly  young  men  en^ 
joyed  the  opportunity  of  entering  this  field  of  occupation  with 
the  hope  of  advancement,  if  not  fortune.  Beginning  as  clerk, 
they  could  gain  a  knowledge  of  the  business  and  qualify  them- 
selves to  conduct  a  business  of  their  own  or  become  partners 
of  their  employer,  in  either  case  becoming  independent,  self- 
reliant,  self-supporting,  and  valuable  citizens,  maintaining  their 

339 


family  in  comfort.  Now  this  opportunity  is  closed.  The  field  is 
monopolized  by  combinations  of  wealth.  The  clerk  must  remain 
a  clerk,  without  hope  in  the  future,  except  such  increase  in  his 
pitiful  wages  as  his  master  may  in  his  magnanimity  see  fit  to  dole 
out  to  him.  His  opportunity  is  further  limited  by  his  being 
forced  into  competition  with  helpless  women,  driven  by  necessity 
to  accept  any  wage  in  order  to  exist. 

To  sum  up  the  whole,  this  policy  of  the  trusts  is  an  aggressive 
invasion  organized  against  the  best  interests  of  society  and  de- 
structive to  our  free  institutions  and  popular  government.  It 
is  too  often  the  instigator  of  fraud,  corruption,  bribery,  and  trea- 
son. It  is  the  ally  of  despotism,  tvranny,  mercenary  selfishness, 
and  slavery,  and  is  an  enemy  to  the  elevation  of  the  race  and  the 
equality  of  man. 


JOHN  B.  CONNEK. 

Chief  Indiana  Bureau  of  Statistics. 

It  is  said  that  the  germ  of  the  corporation  idea  had  its  origin 
in  Eome  in  the  ecclesiastical  organizations  and  combinations,  and 
that  the  English  law  in  respect  to  corporations  was  fashioned  by 
these  ancient  impressions,  when  taking  civil  instead  of  ecclesias- 
tical form.  Then  followed  the  organization  of  guilds  in  trade 
and  commerce,  and  universities.  To  a  great  extent  in  these  times 
of  combinations  and  trust  organization,  the  corporation  has  taken 
on  the  idea  wholly  of  corporate  personality,  instead  of  that  of 
public  utility.  More  than  a  century  ago  Blackstone  said:  "When 
it  is  for  the  advantage  of  the  public  to  have  any  particular  rights 
kept  on  foot  and  continued,  to  construct  artificial  persons,  who 
may  maintain  a  perpetual  succession  and  enjoy  a  kind  of  legal 
immortality/'  the  law  authorizing  corporations  seems  necessary 
and  proper.  Note  that  he  predicated  the  need  of  this  form  of 
organization  "for  the  advantage  of  the  public."  In  the  early  his- 
tory, and  indeed  till  recent  years  in  this  country,  the  idea  and 
principle  of  advantage  to  the  public  were  both  the  purposes  of 
law  authorizing  corporations  and  their  limitations.  The  decisions 
of  many  high  courts  go  to  confirm  this  view. 

But  in  recent  years  legislative  bodies  have  on  one  account  and 
another  extended  the  rule  under  which  corporations  have  been 
organized,  till  the  persons  participating  in  their  organization, 
and  not  "public  benefit"  are  the  only  conceptions  of  their  being. 
Maintaining  this  view,  recently  the  well-known  head  of  one  of  the 
great  trusts  said :  "It  is  not  material  to  the  public  how  business 

340 


is  transacted,  whether  by  a  corporation  or  by  a  trust,  as  the 
object  is  the  personal  interests  alone  of  those  who  participate  and 
invest  for  profit." 

And  so  practically  many  states  in  their  legislation  -seem  to 
have  drifted  away  from  the  purpose  of  the  early  law  creating  cor- 
porations, and  herein  lies  the  uprising  against  trusts  which  have 
taken  advantage  of  this  condition.  No  class  of  the  people  can 
say  to  any  other  class  that  "You  did  this."  The  stream  never 
rises  higher  than  its  source.  Year  after  year  the  people  of  all 
parties  have  been  electing  and  re-electing  to  legislative  bodies 
of  the  states  those  who,  under  misapprehension,  or  otherwise, 
enacted  the  laws  perverting  the  true  idea  of  public  advantage  in 
corporate  bodies.  The  real  remedy  lies  in  a  complete  revision  of 
these  laws,  and  in  a  return  to  functions  held  to  be  for  the  "public 
advantage."  It  is  not  hard  to  discriminate  or  to  determine  what 
is  included  in  such  organizations.  Great  railway  lines  could  not 
be  constructed  by  single  individuals  for  want  of  necessary  capital, 
but  in  the  development  and  growth  of  the  country  natural  water- 
ways and  canals  became  totally  inadequate  in  transportation,  and 
it  was  and  is  greatly  to  the  public  benefit  that  railways  be  con- 
structed, and  associated  capital  and  privileges  of  bonding  and 
stocking  became  imperative  under  the  conception  of  the  corpora- 
tion. And  the  same  is  true  of  other  transportation,  commercial, 
and  the  numerous  manufacturing  enterprises  requiring  great 
capital  to  meet  the  requirements  and  demands  of  the  public. 
None  of  these  obstruct  free  competition,  for  both  in  the  matter 
of  great  transportation  lines  and  manufacturing,  the  country  has 
witnessed  how  public  demand  has  called  one  after  another  .into 
being,  and  competition  has  been  left  free  along  these  lines  of 
enterprise. 

But  state  legislation  in  behalf  of  corporations  in  the  past 
thirty  years,  in  some  of  the  states,  losing  sight  utterly  of  the  prin- 
ciple of  public  benefit,  and  looking  only  to  private  or  personal 
advantage,  have  paved  the  way  to  combinations  and  trusts  hav- 
ing in  view  the  restraint  of  trade  and  destruction  of  competition, 
and  it  is  this  that  has  now  precipitated  the  movement  toward  a 
remedy. 

The  old  form  of  trust,  in  which  one  corporation  held  stock  in 
another,  was  stamped  out  some  years  ago  by  the  courts,  but  a  new 
form  of  combination  has  appeared  lately  in  which  a  corporation 
under  a  new  name  absorbs  industrial  organizations  in  given  lines 
by  purchase,  and  issues  of  stock,  evidently  having  for  its  object 
such  abridgement  of  the  law  of  competition  and  limitations  on 
production  as  threaten  public  interests.  It  is  this  new  order  of 

341 


Combination  to  which  state  legislatures  must  address  themselves 
in  the  way  of  such  revision  of  corporation  legislation  as  will  meet 
and  defeat  personal  ends  having  no  conception  of  public  good.  . 

It  is  held  by  some  that  the  economic  policy  of  this  country 
promotes  the  organization  of  trusts.  This  is  best  answered  by 
the  facts,  that  Great  Britain  maintains  a  totally  different  policy, 
and  yet  that  country  is  where  trusts  originated  and  where  they 
yet  abound.  Great  Britain  has  corporate  and  trust  combinations 
capitalized  up  into  the  billions  of  dollars.  There,  as  here,  the 
fundamental  provisions  of  law,  originally  intended  to  extend  cor- 
porate privileges  only  in  consideration  of  public  benefit,  have 
been  perverted  to  recognize  personal  and  private  advantage 
largely.  And  so,  eager  always  to  avail  themselves  of  such  per- 
sonal advantages,  this  condition  has  been  seized  upon  by  many, 
and  thus  far  acquiesced  in  by  all  classes  and  parties,  and  only  in 
the  past  few  years  have  the  people  begun  to  realize  that  there  was 
a  wrong  somewhere  underlying  the  possibilities  for  such  a  con- 
dition. The  note  of  warning  sounded  by  the  Sherman  act  passed 
by  Congress  in  1890  touching  this  question  in  its  interstate  rela- 
tions should  be  made  available  in  state  revision  of  corporation 
law,  and  legislation  that  would  stamp  out  trusts  under  state  juris- 
diction and  authority. 

It  is  readily  seen  that"  by  such  revision  of  the  laws  respecting 
corporations  as  would  embrace  the  conception  of  advantages  to 
the  public,  would  of  itself  make  impossible  the  organization  of 
corporate  trusts  having  the  tendency  toward  restraint  of  trade, 
which  is  contrary  to  the  interests  of  the  public.  At  least  such 
combinations  would  have  no  lawful  status.  The  possibility  of 
such  combinations  operating  under  the  laws  of  states  not  so  revis- 
ing their  codes,  might  readily  be  met  and  prevented  by  like  proper 
requirements.  There  could  be  no  breach  of  the  amity  between 
states  under  the  recognition  of  such  iust  provisions  as  put  both 
home  and  foreign  corporations  on  the  same  footing.  It  may  read- 
ily be  supposed  that  the  action  of  a  few  state  legislative  bodies 
in  this  direction  would  soon  influence  all  the  others  to  a  return 
to  the  original  conception  of  corporate  authority  and  privileges. 

It  has  been  said  that  revolutions  never  go  backward.  That 
is  true  of  revolutions  in  the  right  direction,  and  when  they  tend 
toward  higher  and  better  conditions,  but  not  applicable  in  fact 
or  observation  to  industrial,  commercial  and  social  conditions  of 
a  state  or  nation  possessing  the  power  of  imparting  higher  and 
better  aspirations  to  all  whom  they  touch.  The  fears  and  im- 
pressions of  fatalism  for  the  most  part  have  their  origin  simply  in 
misapprehension  of  the  facts  and  want  of  ability  to  discriminate. 

942 


Take  an  illustration  at  point  in  the  matter  of  commercial  organ- 
ization: "When  the  numerous  lines  of  railway  from  the  central 
west  to  the  seaboard  began  to  consolidate,  many  believed  that  it 
was  the  beginning  of  capitalization  of  such  power  as  would 
eventually  bring  ruin  to  great  interests  and  great  industries.  That 
such  consolidations  have  resulted  in  shortening  transit  three- 
quarters  in  time,  and  very  greatly  reducing  expenses  of  travel 
and  freights,  these  fears  are  now  seen  to  have  been  without  foun- 
dation. If  it  was  then  believed  that  such  powerful  capitalization 
would  eventuate  in  combinations  that  would  overthrow  the  law 
of  competition  and  result  in  restraint  of  trade,  the  Supreme  Court 
decisions  of  1897,  under  the  law  of  1890,  already  referred  to,  show 
how  strong  the  country  is  at  the  first  appearance  of  possible  dan- 
ger. If  the  revolution  in  railway  consolidations  set  its  face  for 
strides  beyond  the  limit  of  public  good,  we  had  in  the  court 
decisions  of  1897  a  very  marked  illustration  of  the  fact  that  such 
revolutions  do  go  backward,  and  of  the  power  of  the  nation  to 
put  limitations  on  corporate  greed. 

The  philosophy  of  Mr.  Jefferson,  that  the  possibility  of  error 
might  be  tolerated  where  truth  was  left  free  to  combat  it,  is  ap- 
plicable in  business  and  commercial  affairs  under  free  competition 
and  natural  laws  of  trade.  The  law  of  the  nation  and  the  courts 
have  shown  how  they  stand  for  truth,  so  far  as  interstate  com- 
merce is  concerned.  The  states  may  exemplify  the  power  of 
truth  over  error  in  state  relations  in  the  same  way. 


J.  G.  SCHONFAKBEK. 

Executive  Committee  Order  Knights  of  Labor. 

Thirty  years  ago  the  great  organization  known  as  the  Knights 
of  Labor  issued  its  first  public  declaration  of  principle  and  in- 
tents, and  the  writers  of  that  declaration  must  have  been  pro- 
foundly prophetic  in  the  scope  of  their  thought.  The  first  par- 
agraph in  that  declaration  predicted  exactly  the  conditions  which 
have  made  it  necessary  as  a  patriotic  duty  for  the  Civic  Federa- 
tion of  Chicago  to  call  together  these  men  present  to  confer  as 
to  the  public  welfare.  The  Knights  of  Labor  is  not  a  combina- 
tion of  private  individuals  bound  together  for  the  purpose  of 
furthering  their  personal  individual  interests,  regardless  of  any 
other  individuals,  or  the  common  welfare  of  society.  It  is  a 
popular  combination,  formed  for  the  purpose  of  maintaining  and 
defending  the  best  interest?  of  society  as  a  whole,  and  guarding 
arid  Advancing  the  general  welfare.  It  has  chosen  as  its  slogan 


in  this  great  social  contest,  "the  greatest  good  to  the  greatest 
number,"  as  follows: 

"The  alarming  development  and  aggressiveness  of  the  power 
of  money  and  corporations  under  the  present  industrial  and 
political  systems  will  inevitably  lead  to  the  hopeless  degradation 
of  the  people.  It  is  imperative,  if  we  desire  to  enjoy  the  full 
blessings  of  life,  that  a  check  be  placed  upon  unjust  accumula- 
tion and  the  power  for  evil  of  aggregated  wealth.  The  much 
desired  object  can  only  be  accomplished  by  the  united  efforts  of 
those  who  obey  the  divine  injunction,  'In  the 'sweat  of  thy  face 
thou  shalt  eat  bread,'  therefore,  we  have  formed  the  order  of 
Knights  of  Labor  for  the  purpose  of  organizing,  educating,  and 
directing  the  power  of  the  industrial  masses." 

Calling  upon  all  who  believe  in  securing  the  greatest  good 
to  the  greatest  number  to  aid  and  assist  us,  we  declare  that  our 
aims  are:  t 

1.  To  make  industrial  and  moral  worth,  not  wealth,  the  true 
standard  of  individual  and  national  greatness.  2.  To  secure  to 
the  workers  the  full  enjoyment  of  the  wealth  they  create;  suf- 
ficient leisure  in  which  to  develop  their  intellectual,  moral  and 
social  faculties;  in  a  word,  to  enable  them  to  share  in  the  gains 
and  honors  of  advancing  civilization. 

This  is  the  general  purpose  of  the  organization,  and  the 
declaration  goes  on  setting  in  detail  twenty-four  measures  by 
which  it  is  hoped  the  declared  objects  may  be  attained;  all  of 
these  depend  upon  legislation  directed  by  the  popular  voice,  as 
our  Constitution  provides,  and  all  are  consistent  and  in  harmony 
with  the  spirit  of  our  free  institutions  and  methods  of  our  gov- 
ernment. 

It  will  thus  be  seen  that  the  object  of  the  Knights  of  Labor 
is  moral  as  well  as  economic,  fostering  indenendence,  pride  of 
character,  dignity  and  manhood,  and  endeavoring  by  precept 
and  action  to  elevate  mankind  to  that  plane  upon  which  it  can 
share  in  the  gains  and  honors  of  enlightened  advancing  civiliza- 
tion. Having  thus  called  your  attention  to  the  character  of  at 
least  one  great  reform  labor  organization  and  the  basis  of  its 
work,  I  shall  only  briefly  attempt  to  discuss  its  relation  to  trusts 
and  combinations,  our  reasons  for  opposing  the  same,  and  a  sug- 
gestion of  remedy  not  so  radical  as  to  cause  revolution. 

We  have  long  looked  for  and  expected  the  conditions  that 
now  confront  the  people,  but  I  trust  we  are  not  so  blind  as  to 
confound  all  combinations  of  capital  looking  to  economy  of  pro- 
duction and  distribution  with  those  especially  detrimental  to  the 
interests  of  society.  Trusts  should  be  divided  into  two  classes 

344 


at  least;  one  class,  that  which  find  their  "being  and  profit  in  the 
franchises  or  special  privileges  granted  by  city,  state  and  nation; 
receiving  legislation  which  enables  them  to  mortgage  the  unborn 
babe  of  the  American  citizen,  as  well  as  burden  him  by  taxation  to 
the  point  of  bare  subsistence.  The  other  class  is  that  which  finds 
its  profit  solely  by  combination  of  capital,  and  performing  useful 
functions  in  society,  such  as  partnerships  usually  perform. 
Where  this  latter  class  are  not  enabled  by  the  aid  of  an  iniquitous 
and  discriminating  tariff  or  alliance  with  other  corporations,  that 
enables  it  to  restrict  production,  it  can  do  little  harm  in  the  field 
of  individual  competition.  We  believe  the  remedy  for  the  first 
class  of  trusts  is  so  simple  and  patent  to  all  that  there  need 
hardly  be  a  discussion  of  it  now.  It  has  almost  passed  from  the 
field  of  discussion  to  the  field  of  actuality.  Over  three  hundred 
American  cities  have  in  part  or  wholly  given  us  an  example  by 
municipal  or  state  ownership  of  public  utilities  how  these  trusts 
can  be  eliminated  from  the  field.  If  the  power  to  oppress  the 
people,  to  burden  society  and  mortgage  futurity  has  been  given 
by  law,  it  can  be  taken  away  by  law,  and  that,  too,  without  injus- 
tice to  anyone.  Ptiblic  utilities,  such  as  railroads,  telegraph, 
water,  electric  light,  gas,  street  railways,  are  among  the  princi- 
pal trusts  or  combinations  that  oppress  the  people  which-  can 
be  easily  and  safely  remedied.  Our  organization  pointed  this 
out  at  the  same  time  it  warned  the  people  of  the  "alarming  devel- 
opment and  aggressiveness  of  the  power  of  money  in  corpora- 
tions," by  suggesting  in  its  preamble  that  all  things  which  can 
be  best  done  for  the  whole  people  by  the  whole  people,  should 
be  so  performed.  At  the  bottom  of  the  success  and  the  main 
example  for  nearly  all  the  combinations  of  to-day  has  been  that 
given  by  gas  and  water  corporations  and  municipal  and  state 
railways  generally.  Having  gradually  eliminated  competition, 
they  have  watered  the  stock  and  distributed  the  same  so  as  to 
make  it  almost  impossible  to  secure  local  legislation  that  would 
restore  to  the  people  the  valuable  rights  foolishly  given  away, 
lost  or  stolen. 

It  remains  to  be  seen  whether  the  national  government  is 
beyond  the  reach  of  a  quickened  public  conscience,  and  can  be 
induced  to  enact  such  legislation  as  will  gradually  pump  the 
water  out  of  these  inflated  capitalizations  of  inter-state  roads, 
telegraphs  and  telephones,  and  restore  to  the  people  by  taxation 
those  rights  which  are  as  essential  to  the  perpetuity  of  the  state 
and  nation  as  is  the  repelling  of  a  foreign  foe  or  the  maintaining 
of  the  so-called  public  credit.  Over-capitalization  has  been  pro- 
ductive of  higher  charges  for.  all  these  services  to  the  public, 

345 


and  has  opened  the  door  for  the  speculator  and  the  promoter, 
until,  like  England,  we  are  on  the  verge  of  a  South  Sea  bubble 
bursting,  which  can  but  bring  misery  and  poverty  to  the  entire 
country.  As  stated,  we  believe  the  remedy  lies  in  the  hands  of 
the  city,  state  and  national  governments  to  destroy  this  kind  of 
trusts.  They  had  their  being  in  law,  and  should  find  their  power 
for  evil  eliminated  by  law,  that  is,  by  condemnation  and  pay- 
ment to  the  holders  of  the  actual  value  of  the  property  con- 
demned, not  including  the  franchise  value,  which  has  never 
become  the  actual  property  of  the  corporation,  for  the  reason 
that  even  the  state  cannot  give  or  deed  away  the  rights  of  future 
generations. 

The  other  kind  of  trusts,  the  commercial  combinations,  have 
little  power  for  evil  if  deprived  of  the  support  and  assistance  of 
the  special  privileged  corporations.  Take  away  the  railroads  and 
their  discriminating  power  between  shippers,  and  where  would 
be  your  Standard  Oil  Company?  With  railroads  transporting 
one  gallon  of  oil  as  cheaply  as  a  hundred,  as  would  be  the  case 
under  government  ownership,  we  could  safely  leave  to  individual 
effort  the  development  of  competitive  enterprises  that  would  keep 
down  prices,  while  enlarging  the  field  for  employment. 

In  the  mass  of  evidence  presented  before  the  Industrial  Com- 
mission it  was  shown  that  enormous  sums  were  paid  in  the  form 
of  rebates  by  the  railroads  of  the  country  to  the  favored  trusts, 
which  favoritism  alone  appears  to  guarantee  them  the  power  to 
crush  all  opposition  and  establish  a  monopoly  for  each  in  its 
respective  field.  Had  I  the  time,  many  instances  in  this  evi- 
dence could  be  cited,  namely:  The  Atchison,  Topeka  &  Santa 
Fe  Eailroad  case,  and  the  great  case  of  Mr.  George  Rice  before 
the  Inter-State  Commerce  Commission,  in  his  endeavor  to  do 
business  in  oil  on  equal  terms  with  other  citizens.  It  would  be 
only  multiplying  evidence  to  repeat  these  cases.  The  extent  to 
which  this  favoritism  goes  in  the  discrimination  against  the  com- 
petitors of  trusts  is  almost  impossible  to  estimate,  but  it  is  suffi- 
cient to  maintain  these  monopolies,  and  let  it  be  remembered 
that  this  discrimination  is  exercised  upon  the  highways  of  the 
nation,  upon  which  all  citizens  are  supposed  to  have  equal  rights 
and  advantages. 

It  is  claimed  by  the  railroad  management  that  they  are  mov- 
ing the  freights  of  this  country  cheaper  than  the  freights  of  any 
other  country  are  moved.  Statistics  show  that  the  average  cost 
of  moving  freight  is  0.85  cents  per  ton  mile,  including  every- 
thing, and  yet  it  was  shown  before  the  Industrial  Commission 
that  individual  shippers  had  paid  and  were  paying  from  4.33  to 

348 


13.57  cents  per  ton  mile.  If  this  is  true,  and  the  average  for  all 
is  the  0.85  cents  per  ton  mile,  then  how  much  less  than  0.85  cents 
per  ton  mile  does  the  trust  pay  in  order  to  bring  the  average  of 
all  freights  of  the  country  down  to  0.85  cents?  This  has  only 
been  set  out  to  show  what  an  enormous  advantage  the  trusts  have 
under  the  present  railroad  system;  indeed,  with  most  of  us  this 
seems  to  be  the  key  to  the  trust  situation.  With  competition  in 
the  market  shut  off  by  the  railroads,  the  trusts  are  the  masters 
of  the  situation;  the  roads  are  not  hurt,  but  merely  get  the 
freight  from  one  shipper  instead  of  many,  thereby  decreasing  the 
employment  of  labor,  and  yet  not  decreasing  the  price  of  the 
product  carried. 

Now,  what  is  the  remedy?  Take  these  railroads,  these  high- 
ways of  the  people  from  the  corporations.  By  such  legislation 
as  will  insure  the  payment  of  the  actual  value  of  the  roads,  less 
the  over-capitalization  of  the  franchise  value  and  other  water 
in  the  stock,  re-establish  the  equality  of  all  the  people  in  the 
access  to  the 'highways  of  the  nation.  When  this  is  done,  the 
cornerstone  which  supports  the  trust  superstructure,  and  the 
main  edifice,  will  fall.  With  absolute  equality  over  the  railways 
of  the  country,  so  that  every  butcher  could  ship  a  car  of  cattle 
just  as  cheap  as  the  beef  trust,  the  beef  trust  could  not  hold  the 
monopoly  of  the  beef  trade;  with  a  like  condition  every  owner 
of  coal  lands  could  reach  the  coal  market  on  the  same  terms  as 
the  monopolistic  combination  of  coal  owners,  and  this  is  true  in 
regard  to  nearly  every  industry  monopolized  by  trusts.  Their 
control  of  the  means  of  access  to  the  markets  or  their  connection 
with  those  who  do  control  these  means  of  access  is  the  principal 
source  of  their  power. 

To-day,  by  means  of  a  postal  system  operated  by  government, 
the  letter  of  the  individual,  pauper,  or  workman,  miner  or 
butcher,  oil  producer  or  farmer,  goes  to  its  destination  just  as 
quickly  and  at  as  little  expense  as  the  letter  of  an  Armour,  a 
Eockefeller  or  any  king  of  industry.  Send  their  coal,  their  oil, 
their  iron,  their  meat,  their  wheat  to  market  upon  the  same 
terms  of  equal  speed  and  cost,  and  these  great'  combines  will  soon 
lose  their  power  for  evil,  and  the  increase  of  healthy  competition 
will  give  increased  employment  to  labor  and  higher  wages  be- 
cause of  demand. 

Corporate  ownership  of  railroads  is  the  backbone  of  the  trust 
and  a  protective  tariff  its  right  arm.  It  is  within  the  limit  of 
possibilities  for  the  government,  by  the  right  of  eminent  domain, 
to  come  into  the  ownership  and  control  of  the  railroad,  and  also 
to  repeal  the  tariff  tax  upon  every  article  controlled  by  a  trust. 

347 


.  Do  both  these  tiling",  and  it  is  scarcely  probahle  that  trusts 
could  exist  at  all. 

The  withholding  of  opportunity  to  labor  out  of  use  through 
iniquitous  tax  systems  in  the  cities  and  states  has  restricted  op- 
portunity and  restricted  trade.  Tax  idle  land  out  of  the  hands 
of  the  monopolizer,  or  let  him  pay  the  people  for  the  special 
privilege  of  controlling  the  land  just  the  same  amount  as  his 
competitor  pays  for  utilizing  the  land,  and  we  will  have  oppor- 
tunities for  labor  galore,  the  demand  for  labor  will  soon  raise 
wages.  Coal  mines  and  the  farms,  the  building  sites  and  the 
water  fronts  will  resound  with  the  ring  of  the  pick,  the  hammer 
and  the  noise  of  the  plow,  for  it  will  be  unprofitable  to  hold  the 
opportunities  for  labor  out  of  the  market.  Our  present  system 
of  taxation  is  so  much  to  blame  for  the  present  industrial  con- 
ditions that  men  who  are  seeking  the  remedy  to  correct  must  have 
the  courage  to  apply  the  knife  of  legislation  to  the  sore,  even 
if  it  cuts  to  the  quick. 

I  have  grave  doubts -about  the  American  legislator  having 
arrived  at  that  point  of  courage ;  probably  his  constituency  have 
not  suffered  quite  enough  yet  to  make  them  forcibly  prod  him 
into  action,  and  I  am  justified  in  this  belief  by  the  attitude  of 
the  last  Congress  toward  the  Dockery  amendment  to  the  tariff 
bill.  It  is  now  hardly  disputed  that  the  high  tariff  act  has  en- 
abled various  trusts  and  manufacturers  to  levy  tribute  on  the 
American  people  to  the  full  extent  of  the  tariff,  while  only  in 
one  or  two  isolated  cases  dividing  even  a  small  portion  of  the 
result  of  the  robbery  of  the  whole  people  with  their  employees. 
The  tariff  tax  has  helped  the  industrial  trusts  to  put  up  prices 
and  enhance  the  cost  of  living  to  the  consumers,  and  when  we 
remember  that  the  consumers  are  composed  of  seven-eighths  of 
the  people  of  the  country  and  the  employees  of  protected  indus- 
tries hardly  the  other  eighth,  it  will  be  seen  clearly  how  injus- 
tice is  done  by  this  iniquitous  tax.  It  has  not  compelled  the 
manufacturer  to  raise  wages,  nor  to  reduce  the  working  hours, 
for  both  of  these  results  wherever  secured  have  been  forced  at 
the  point  of  the  strike  by  the  organizations  of  labor,  while  the 
condition  of  the  consumers,  the  larger  mass  of  wage  earners 
and  farmers,  has  been  lowered  in  the  scale  of  civilization.  No 
tariff  tax  ever  helped  the  farmer  to  pay  off  the  mortgage,  nor  the 
unskilled  laborer  to  get  over  $1.25  a  day,  and  only  a  beneficent 
God  who  ordained  a  famine  or  short  crop  in  one  country  and 
smiling  plenty  in  another  has  shifted  the  starvation  point  from 
one  hemisphere  to  another  temporarily,  while  the  brain  of  man 

848 


conceives  and  invokes  measures  that  will  eventuate  in  poverty 
for  the  millions  all  around  and  plenty  for  the  few  everywhere. 

Let  us  summarize:  The  Knights  of  Labor  are  opposed  to 
trusts  and  to  restrictions  upon  trade,  commerce  and  industry, 
because  we  believe  that,  firstly,  trusts  are  an  evil  when  allied 
with  corporate  monopoly,  or  when  receiving  special  privileges 
from  municipality,  state  or  nation,  and  to  secure  these  special 
privileges  they  resort  to  the  corruption  of  councils,  legislators, 
and  Congresses,  corrupting  the  body  politic  and  lowering  the 
standard  of  morality  and  liberty  among  the  people.  We  believe 
this  evil  can  be  cured  by  municipal,  state  and  national  ownership 
of  the  means  of  transportation  of  passengers,  freight  and  intelli- 
gence, and  the  absolute  freedom  to  sell  in  the  highest  market 
and  buy  in  the  lowest.  Secondly,  restrictions  upon  trade  by 
means  of  tariff  tax  is  governmental  aid  to  the  trusts  and  a  special 
privilege  to  levy  tribute  upon  the  consumers;  and  thirdly,  be- 
cause these  trusts  not  only  lead  to  legitimate  economies  in  man- 
ufacture and  distribution,  but  to  abuse  of  legislation,  corrup- 
tion of  courts  and  legislatures,  and  to  the  oppression  of  the 
masses,  as  well  as  shutting  out  the  opportunity  for  employment 
for  the  industrial  masses.  Our  platform  in  its  fifth,  seventh, 
seventeenth,  and  twentieth  planks  has  for  twenty-five  years 
been  offered  as  the  proper  remedy  for  these  evils  under  our 
form  of  government,  and  until  the  people  of  this  country  are 
aroused  thoroughly  to  the  dangers  to  their  liberty  lurking  in  a 
continuance  of  the  present  system  and  demand  at  the  hands  of 
their  law-making  power  the  radical  legislation  needed,  our  work 
ay,  the  Knigbts  of  Labor  will  go  on,  organizing  and  educating 
the  industrial  masses  to  a  realization  of  their  rights  and  the  need 
for  real  liberty. 


M.  M.  GAKLAND. 

Ex-President  Amalgamated  Association  of  Iron  and  Steel  Workers. 

Mr.  Garland,  in  "An  Iron  and  Steel  Worker's  View  of  Com- 
bination," said, : 

With  a  full  realization  that  this  conference  is  made  up  of 
many  of  the  brightest  minds  of  the  country,  and  being  neither  a 
constitutional  lawyer  nor  a  professor  of  economics,  it  would  be 
the  height  of  egotism  on  my  part  to  say  anything  on  this  great 
question  now  under  consideration,  except  from  the  standpoint  of 
actual  experience,  and  that  must  be  by  the  humble  experience  of 

349 


an  iron  and  steel  worker.  And  while  this  observation  is  from 
that  source,  yet  it  may,  in  application,  fit  most  of  the  other 
branches  of  business  and  interests  affected  by  the  trusts  and  com- 
binations. The  whole  life  of  the  men  employed  in  the  iron  and 
steel  rolling  mills  must,  from  the  very  nature  of  his  labor,  be  of 
the  practical.  Years  of  such  toil  leaves  no  room  in  his  life  for 
theory.  With  him  is  first  to  realize  results;  he  reckons  the 
probability  of  a  question  from  actual  experience  with  it. 

The  trust  question  is  an  old  one.  It  has  been  the  instigator 
of  much  attempted  anti-legislation,  and  has  formed  the  target  for 
campaign  speakers  in  almost  every  kind  of  elections,  from  ward 
aldermanship  to  the  highest  office  in  the  land.  Its  influence  was 
used  as  one  of  the  exhorting  features  for  organizing  labor  among 
the  iron  and  steel  workers  more  than  a  quarter  of  a  century  since, 
and  now  it  works  a  most  active  development  of  organization 
among  workingmen  because  of  example  from  employer. 

When  the  iron  and  steel  worker  became  convinced  that  capital 
at  all  times  had  been  used  by  some  possessing  it  to  monopolize 
particular  branches  of  business,  until  the  vast  and  various  pur- 
suits of  the  world  were  becoming  centralized  under  the  immedi- 
ate control  of  a  comparatively  small  portion  of  mankind,  he  real- 
ized that  to  secure  for  himself  an  equivalent  for  his  labor  suffi- 
cient to  maintain  him  in  comparative  independence  and  respecta- 
bility— to  procure  the  means  with  which  to  educate  his  children 
and  qualify  them  to  play  their  part  in  the  world's  drama,  it  was 
absolutely  compulsory  that  he  form  a  combination  with  his  fel- 
low worker  to  control,  as  far  as  possible,  wages  and  fair  treatment. 
This  organization  was  immediately  formed,  and  is  now  termed  a 
trust  by  many,  but  the  fair  mind  cannot  consider  the  open  trade 
union  as  such  under  the  general  acceptance  of  the  term;  but  in 
deference  to  a  number  of  decisions  by  the  eminent  judges  of  both 
local  and  superior  courts  in  the  several  states  of  the  Union  and  the 
decision  of  an  attorney-general  of  the  United  States,  all  of  which 
declare  us  at  least  amenable  to  whatever  penalties  would  occur  to 
a  trust  violating  the  statutes  of  present  enacted  anti-trust  legisla- 
tion, to  that  extent  we  are  compelled  to  accept  the  onus.  But  it 
is  the  recent  rush  of  corporations,  doing  business  in  the  same 
line  of  manufacture  or  interest,  into  one  or  more  immense  corpo- 
rate combinations,  usually  termed  trusts,  that  has  challenged 
widespread  comment  and  occasioned  the  discussion  of  the  ques- 
tion by  this  conference.  No  corporation  desires  to  lose  its 
identity,  find  there  oan  he  no  doubt  that  much  of  this,  in  the  iron 
and  steel  industries,  has  been  carded  by  the  same  elements  that 
forced  the  workmen  to  organize — that  of  self-preservation.  The 

350 


Corporation  of  many  years'  standing  had  grown  with  the  increased 
uses  of  iron  and  steel,  until  in  some  branches  of  the  trade  several 
firms  were  more  powerful  and  held  more  assets,  each  within  them- 
selves, than  any  of  the  trusts  that  have  yet  been  formed  in  the 
same  line  of  business. 

The  discovery  of  immense  mountains  of  Bessemer  steel  ores 
in  the  Mesaba  and  adjoining  ranges,  together  with  the  ductile  and 
malleable  qualities  of  steel,  have  made  possible  the  introduction 
of  machinery  on  a  large  and  costly  scale,  and  large  capital  rapidly 
gained  an  ascendency  over  the  smaller  and  lesser  equipped  plant 
until  one  of  two  options  against  absolute  dissolution  only  re- 
mained. One  to  try  to  eke  out  an  existence  on  what  orders 
might  be 'left  over  after  the  larger  plants  had  taken  all  that  it 
could  attend  to,  and  the  other  was  to  combine  capital  with  other 
plants  that  were  at  the  same  disadvantage,  and  form  the  corpo- 
rate combine,  the  trust.  Already  the  mighty  change  has  taken 
place.  We  had  passed  the  point  where  corporations  in  iron  and 
steel  were  of  great  moment,  whose  capitalization  was  limited  to 
thousands  or  hundreds  of  thousands  of  dollars,  and  we  had  en- 
tered the  era  of  millions  and  hundreds  of  millions  of  dollars  capi- 
talization. The  recent  years  of  business  depression  furnished 
many  examples  of  this  truth.  For  instance,  one  of  the  largest 
steel  firms  in  the  country  in  the  winter  of  1893  and  1894,  and  at  a 
time  of  dearth  in  orders,  taking  advantage  of  a  glutted  labor  mar- 
ket, reduced  the  wages  of  employees,  and  then  sent  agents  out  with 
the  open  declaration  that  they  were  to  take  orders  irrespective  of 
price.  The  hope  of  citizens  in  many  towns  and  villages,  which 
depended  on  rolling  mills  and  factories,  was  taken  away,  and 
thousands  of  workmen  were  bereft  of  even  the  broken  time  and 
small  pittance  that  had  served  to  keep  them  from  want,  while  the 
boast  of  the  large  corporations  went  abroad,  that  they  had  given 
their  employees  steady  work. 

The  possibility  of  an  employee  becoming  a  steel  magnate,  as 
insinuated  by  some  of  the  speakers  here,  has  long  since  become 
as  scarce  as  the  proverbial  "hen  teeth/' 

The  trusts  can  avoid  reducing  wages  wantonly.  They  can 
divide  work  among  employees  in  times  of  depression  in  any  line 
of  trade,  as  the  employees  would  then  be  in  the  employ  of  one  or 
but  few  firms.  But  the  inclination  to  better  the  condition  of  the 
employee  will  be  no  stronger  with  the  trust  than  it  has  been  with 
the  corporation,  but  the  endeavor  to  apply  this  legislation  will 
find  a  more  fertile  field  in  this  direction  than  any  other. 

But  in  considering  the  subject  of  legislation,  so  strongly  urged 
by  some  against  trusts,  care  should  be  exercised  that  the  bills  hold 

851 


no  ulterior  meaning.  The  working  people  are  appealed  to  in 
almost  every  state  to  urge  the  passage  of  some  pet  measure  of  cer- 
tain representatives  to  law-making  bodies,  which  propose  to  crush 
out  trusts  and  combinations ,  and  while  it  may  be  that  labor 
unions  do  not  possess  the  skill,  cunning  and  capability  of  trusts  to 
defeat  the  aim  of  the  enactment,  it  is  certain  that  the  application 
of  such  legislation  has  found  its  final  and  only  target  to  be  labor 
unions.  The  record  of  neither  city  councils,  state  legislation  or 
national  Congress  ever  contained  one  breath  of  intimation  that 
anti-trust,  restriction  of  combination  or  interstate  commerce  laws 
passed  by  these  could,  in  the  least,  interfere  with  the  free  and  full 
exercise  of  the  right  of  workmen  to  organize,  yet,  I  make  the 
assertion,  without  fear  of  successful  refutation,  that  every  one  of 
these  laws  that  have  been  passed  upon  and  found  constitutional 
})j  the  courts  have  been  found  to  apply  to  organizations  of  labor, 
and  that  every  such  law  now  on  the  statutes,  not  yet  passed  upon, 
will  be  so  decided  when  adjudged,  not  excepting  the  much  mooted 
conference  called  for,  state  law  of  Texas,  nor  the  one  that  came 
from  the  home  of  the  "red  apple,"  Arkansas,  or  if  either  or  both 
of  them  become  federal  enactments  there  would  not  be  one  small 
cluck  left  in  the  workingman's  eagle  that  has  soared  so  valiantly 
through  this  hall  for  the  past  two  days. 

Future  anti-trust  legislation  must  be  drawn  with  a  full 
knowledge  of  whether  it  is  intended  to  cover  the  evil,  claimed  by 
this  title,  or  whether  it  is  to  restrict  the  efforts  of  workmen  in  the 
organization  of  their  fellowmen. 

The  position  of  the  worker  may  become  easier  as  the  operation 
of  the  trust  proceeds;  the  example  is  set  and  the  necessity 
widened  for  every  man  in  their  employ  to  unite  in  common  organ- 
ization. The  farmer,  mechanic,  laborer  and  business  man  alike 
.  will  feel  its  effects  for  good  or  evil. 

While  it  is  with  a  true  sympathy  that  springs  from  the  actual 
experience  of  loss  to  the  thousands  of  our  men  of  remunerative 
positions  by  reason  of  the  introduction  of  machinery  that  we 
behold  the  almost  entire  discharge  from  positions  of  that  valu- 
able class  of  citizens,  commercial  travelers,  yet  by  their  presence 
to  the  realm  of  the  wage-worker  will  be  added  another  element 
that  gave  but  passing  thought  as  to  whether  goods  sold  by  them 
were  made  under  fair  or  unfair  conditions,  and  that  the  brain 
that  could  command  a  large  commission  will  of  necessity  be  used 
in  the  council  halls  of  the  labor  and  farmer  organizations,  and  the 
horror  with  which,  all  too  many,  have  held  up  their  hand?  in 
beholding  men  in  organizations  of  labor  resorting  as  their  last 

352 


remedy  to  strike  and  stoppage  of  work  in  resisting  unfair  condi- 
tions which  have  been  imposed  upon  them  will  have  passed  away, 
by  reason  of  a  fuller  knowledge  of  these  wrongs,  brought  about  by 
the  magic  touch  of  concerted  cause,  and  property  rights  will  then 
be  commingled  with  human  rights  by  common  consent.  The 
right  of  workmen,  by  conference,  to  be  heard  through  their  own 
selection  of  representatives  as  to  the  rate  of  wages  and  hours  the 
condition  of  trade  warrants  will  become  in  fact,  and  the  farce 
meeting  now  so  often  employed  by  capital  as  a  prelude  to  the  lock- 
out in  order  to  enlist  public  sympathy  will  disappear  under  the 
melting  rays  of  peaceful  relations,  forced  by  a  wider  field  of  legiti- 
mate trade  unions,  and  the  conference  settlement  will  take  the 
place  of  strike  and  lockout  between  employee  and  the  corporate 
combination. 

Thus  far  in  this  new  day  of  trusts  the  workmen  in  rolling 
mills  find  their  inclination  is  to  treat  with  organization.  The 
annual  wage  scales  and  agreement  were  presented  by  our  repre- 
sentatives and  conferences  arranged  promptly.  An  advance  in 
wages,  ranging  from  ten  to  twenty-five  per  cent  in  different  de- 
partments, was  secured,  .and  further  advances  in  wages  seems 
assured  by  reason  of  advance  in  prices  of  material  and  product, 
which  is  one  of  our  agreements.  A  number  of  plants  that  had 
been  operating  non-union  and  at  unfair  wages,  were  unionized  by 
the  wage  rates  applying  to  them  since  they  had  become  a  part  of 
the  trusts.  I  would  not  be  understood  to  infer  that  there  would 
not  have  been  an  advance  in  wages  if  the  trust  movement  had  not 
been  on,  nor  do  we  think  the  price  of  material  would  have  been 
less,  for  we  note  that  in  branches  where  trusts  do  not  control  the 
greater  rate  of  advance  has  occurred  in  material.  That  in  this 
country  a  trust,  or  the  trusts,  could  long  maintain  an  unnatural 
or  inordinate  price  for  material  or  product  is  a  remote  con- 
tingency, for  not  alone  would  other  capital  interested  in  the  con- 
sumption of  product  combine  on  as  large  a  scale  and  become  their 
competitor,  but  the  fact  remains  that  there  is  not  an  article  pro- 
duced in  these  modern  times,  but  there  are,  or  can  be,  adopted 
several  substitutes  for  it,  and  the  cost,  as  a  rule,  will  not  vary 
enough  to  permit  any  very  great  or  long-lasting  extremity  to  our 
needs. 

That  this  new  form  of  trusts  will  bring,  voluntarily,  any  new 
virtues  to  the  business  world  is  a  doubtful  question.  They  are 
organized  for  the  purpose  of  making  money,  and  will  certainly 
attempt  to  operate  to  that  end:  but  they  have  awakened  more 
powerful  watchers  in  the  interests  of  the  great  mass  of  common 

353 


people,  and  in  this  country  the  majority  of  the  privileges  of  the 
people  and  interests  cannot  long  be  trampled  on.  The  action  of 
the  trusts  within  themselves  will  soon  decide  whether  they  are  to 
be  tolerated  as  useful  members  to  the  nation's  household,  or 
whether  the  show  of  hands  raised  against  them  will  relegate  them 
to  oblivion. 

WILLIAM  H.  TUTTLE. 

Member  Illinois  Bar. 

At  the  present  time,  while  the  subject  of  trusts  and  combina- 
tions of  capital  is  under  discussion,  and  particularly  while  there 
i:'  a  general  demand  that  such  combinations  and  aggregations  of 
wealth  be  regulated  by  law,  a  correct  understanding  of  the  legal 
status  of  combinations  of  labor  becomes  quite  important.  Such 
a  knowledge  is  all  the  more  important  because  it  has  received  com- 
paratively little  attention.  The  legislator,  who  would  regulate 
trusts,  and  at  the  same  time  not  embarrass  trades  unions  should 
understand  the  distinction,  or  lack  of  distinction,  so  far  as  the 
policy  of  the  law  is  concerned  between  combinations  of  capital 
and  combinations  of  labor.  If  the  two  are  so  closely  allied  in  prin- 
ciple as  to  be  separated  with  difficulty,  even7  one  interested  should 
understand  the  matter,  and  be  prepared  to  meet  the  difficulty, 
otherwise  many  radical  measures,  intended  to  root  up  the  tares  in 
the  industrial  field,  will  pluck  up  the  wheat  also.  Striking  ex- 
amples of  this  have  occurred,  leading  to  unjust  criticism  of  our 
judiciary  and  executive  officer?,  because  laws  that  were  aimed  at 
one  class  in  industrial  life,  bit  another  class  as  well,  and  perhaps 
hit  the  other  class  first.  We  will  take  time  to  mention  one  illus- 
tration. In  1890  a  law  was  passed  by  Congress,  entitled  "An 
act  to  protect  trade  and  commerce  against  unlawful  restrictions 
and  monopolies."  It  provided  that  "every  contract,  combination 
in  form  of  trust,  or  otherwise,  conspiracy  in  restraint  of  trade,  or 
commerce,  among  the  several  states  or  with  foreign  nations,  is 
hereby  declared  to  be  illegal."  The  law  was  unquestionably 
aimed  at  railroads  and  monopolies,  and  intended  to  relieve  the 
middle  classes  and  laborinsr  men.  The  laboring  man,  however, 
was  the  first  to  be  affected  bv  it.  and  it  has  even  been  so  far-reach- 
ing as  to  make  the  railroad  strike  illegal,  which  subject  we  will 
di=c\iss  more  at  length  hereafter.  It  can  readily  be  seen  that 
unless  we  understand  the  situntion  our  somewhat  frenzied  de- 
mand, for  radical  legislation  to  help  the  laboring  man,  may 
cause  him  to  prav  for  deliverance  from  his  would-be  friends. 

This  fact,  with  which  a  layman  may  not  be  familiar,  should 

3M 


be  borne  in  mind  in  this  discussion,  as  in  all  other  similar  dis- 
euiaiuus,  that  is,  that  most  of  the  law  principles  involved  are  not 
found  in  the  statutes,  but  belong  to  the  realm  of  the  common  law, 
or  unwritten  law.  The  common  law  is  a  set  of  legal  principles 
which  courts  have  declared  to  be  the  law  because  the  good  of 
society,  technically  known  as  public  policy,  demands  it.  Public 
policy  therefore  plays  an  important  part  in  our  laws.  It  is  the 
basis  of  the  common  law  and  the  sanction  of  our  statute  laws. 
Indeed,  statute  law  may  be  declared  void  because  it  opposes  pub- 
lic policy.  Story  says:  "What  constitutes  public  policy  is  dif- 
ficult exactly  to  determine.  It  is  in  its  nature  uncertain  and 
indefinite,  fluctuating  with  the  change  of  habits  and  opinions, 
with  the  growth  of  commerce  and  with  the  enlargement  of  inter- 
national intercourse,  but  the  rule  may- be  safely  laid  down  that 
whatever  contravenes  an  actual  rule  of  policy  or  which  interferes 
injuriously  with  the  true  interests  of  society  is  against  public 
policy."  Notwithstanding  the  fact  that  public  policy  changes 
with  the  times,  no  principle  has  remained  more  deeply  rooted  and 
unchangeable  than  the  requirement  that  trade  and  competition 
shall  be  free  from  restrictions.  It  is  the  legal  basis  of  our  whole 
industrial  life  under  the  competitive  system. 

We  now  come  to  the  important  question  in  our  discussion. 
Is  there  a  distinction  between  capital  and  labor  so  far  as  concerns 
the  requirements  of  public  policy  that  there  shall  be  freedom  of 
competition?  Is  it  against  public  policy  for  capital  to  combine 
in  trusts  and  monopolies  and  artificially  control  the  price  of  com- 
modities which  it  has  to  sell,  and  not  against  public  policy  for 
labor  to  combine  in  trades  unions  to  artificially  control  its  wages? 
It  may  be  safely  stated  as  a  general  proposition,  that  the  policy  of 
the  law  recognizes  no  distinction  between  capital  and  labor  in 
requiring  freedom  of  competition.  This  was  the  rule  of  the  Eng- 
lish common  law  without  exception,  and  is  the  rule  of  the  present 
common  law  made  up  of  decisions  based  upon  principles  of  public 
policy.  In  recent  years,  however,  certain  distinctions  have  been 
attempted  by  statute  law,  which  we  will  notice  later.  A*  leading 
case,  State  vs.  Stewart,  speaks  in  common  of  labor  and  capital  as 
follows :  "The  principle  upon  which  the  cases,  both  English  and 
American,  proceed,  is  that  every  man  has  the  right  to  employ  his 
talent,  industry  and  capital  as  he  pleases,  free  from  the  dictation 
of  others;  and  if  two  or  more  persons  combine  to  coerce  his  choice 
in  this  behalf,  it  is  criminal  conspiracv.  The  labor  and  skill  of 
the  workman,  be  it  of  high  or  low  degree,  the  plant  of  the  manu- 
facturer, the  equipment  of  the  farmer,  the  investments  of  com- 
merce, are  all  in  equal  sense  property.  If  men  by  overt  acts  of 

355 


violence  destroy  either  they  are  guilty  of  crime/*  Mr.  Tiedman, 
in  his  text  book  on  commercial  paper,  says:  "All  combinations 
of  capitalists,  or  of  workmen,  for  the  purpose  of  influencing  trade 
in  their  special  favor  by  raising  or  reducing  prices,  are  so  far 
illegal  that  agreements  to  combine  cannot  be  enforced  by  the 
courts."  In  the  case  of  Doremus  vs.  Hennessy,  recently  decided 
by  the  Illinois  Supreme  Court,  this  general  language  was  used: 
"No  persons,  individually  or  by  combination,  have  the  right  to 
directly  or  indirectly  interfere  with  or  disturb  another  in  his  law- 
ful busine'ss  or  occupation,  or  to  threaten  to  do  so  for  the  sake  of 
compelling  him  to  do  some  act,  which,  in  his  judgment,  his  own 
interest  does  not  require."  These  decisions,  with  many  other?, 
indicate  that  in  the  field  of  industry,  capital  and  labor  are  part- 
ners of  equal  importance,  endowed  with  the  same  privileges  and 
subject  to  the  same  restrictions.  _  We  can  only  take  time  to  dis- 
cuss, somewhat  disconnectedly,  certain  phases  of  the  law  of  com- 
petition and  apply  the  principles  involved  to  both  labor  and  capi- 
tal, hoping  thereby  to  at  least  illustrate  the  identity  of  these 
principles. 

Free  competition,  whether  involving  capital  or  labor,  deals 
with  the  unit  and  abhors  a  multiple.  The  law  gives  each  person 
the  greatest  freedom  of  individual  action  in  his  business  relations 
with  others.  Such  freedom  is  the  life  of  free  competition.  In 
this  discussion  we  leave  out  of  consideration  all  cases  where  one 
is  bound  by  contract  to  work  for  a  certain  time,  or  to  do  a  certain 
thing.  Such  cases  are  comparatively  few,  however.  Likewise 
there  are  certain  employments  and  lines  of  business  charged  with 
a  public  duty,  which  are  required  to  furnish  certain  services  to 
every  one  and  treat  all  alike.  The  business  of  railroads,  and 
other  common  carriers,  keeping  hotel,  furnishing  light  and  water 
to  a  municipality  are  examples.  With  these  exceptions  always  in 
mind  we  may  accept  this  as  a  general  proposition,  that  every,  one 
may  enter  into  or  refuse  to  enter  into,  may  continue  or  refuse  to 
continue  business  relations  with  each  and  every  one  else. 

This-is  true  of  both  capital  and  labor,  as  proven  by  many  deci- 
sions that  use  language  which  may  be  applied  to  both.  It  is  so 
important  that  the  action  of  the  individual  shall  be  perfectly 
free,  that  the  courts  will  not  inquire  into  the  motive  that  actuates 
him  in  entering  into,  continuing  or  discontinuing  business  rela- 
tions with  others.  So  true  is  this  that  the  courts  frequently 
reiterate  the  statement  that  in  this  regard  a  person's  actions  may 
be  governed  by  "whim,  caprice  or  malice." 

In  emphasizing  the  freedom  accorded  to  the  individual,  we 
have  demonstrated  the  abhorrence  of  the  law  for  any  combina- 


356 


tion,  or  agreement,  or  other  restriction  that  will  deprive  the  indi- 
vidual of  his  freedom,  whether  voluntary  or  otherwise.  If  the 
law,  to  secure  freedom  of  competition,  accords  to  individuals 
unusual  freedom,  it  likewise,  for  the  same  purpose,  greatly 
restricts  their  actions  when  they  pass  from  the  relation  of  so  many 
units  to  an  association  or  combination.  All  agreements  between 
two  or  more  persons  the  object  of  which  is  to  control  the  price  at 
which  the  parties  to  such  agreements  shall  sell  their  commodities, 
the  amount  of  goods  which  they  shall  produce  or  sell,  or  generally 
to  restrain  trade  and  commerce  are  illegal  and  void  as  against 
public  policy.  The  law  is  exceedingly  strict  in  this  regard.  It 
insists  that  the  determination  of  all  these  things  shall  be  left  to 
individual  discretion.  Under  the  common  law,  however,  the 
penalty  for  making  such  an  agreement  consists  in  the  refusal  on 
the  part  of  the  courts  to  enforce  them.  It  results  therefore  thqt 
the  parties  thereto  may  each  individually  carry  out  such  an  illegal 
agreement,  without  suffering  any  criminal  liability.  If  one  fails 
to  carry  out  such  an  agreement,  however,  the  other  parties  to  the 
agreement  cannot  compel  him  to  do  so.  They  cannot  enforce 
against  him  any  fine  or  secure  damages  for  any  loss  to  them 
caused  by  his  failures.  The  court  will  help  neither  party  in  such 
a  transaction,  but  will  treat  the  illegal  contract  as  void.  Many 
contracts  of  this  sort,  involving  capital,  have  been  the  basis  of 
litigation,  and  the  courts  have  again  and  again  condemned  them 
as  against  public  policy.  It  is  apparent  that  when  snch  agree- 
ments between  laboring  men  are  disregarded  by  the  parties 
thereto  they  may  be  deprived  of  further  advantages  and  privi- 
leges under  the  agreement  or  association,  but  the  other  parties 
to  the  agreement  would  not  be  likelv  to  consider  it  worth  while  to 
sue  the  violators  of  the  agreement  for  money  damages.  The 
courts  have  therefore  but  seldom  passed  upon  the  legality  of  con- 
tracts to  raise  or  regulate  wages.  The  fact  that  comparatively 
few  decisions  can  be  found  condemning  contracts  restricting  free 
competition  in  labor  has  led  some  writers  to  question  whether  the 
law  did  not  consider  associations  of  labor  more  favorably  than 
combinations  of  capital.  "We  believe,  however,  the  case  of  More 
vs.  Bennett,  decided  by  the  Illinois  Supreme  Court,  is  directly  in 
point,  and  correctly  expresses  the  law.  In  this  case  one  member 
of  the  Chicago  Law  Stenographic  Association  sought  to  recover 
damages  from  another  member  because  the  latter  had  broken  the 
rules.  The  court  said  of  the  association:  "It  clearly  appears, 
both  from  its  constitution  apd  bv-laws,  and  from  the  averments 
of  the  declaration,  that  one  of  the  objects,  if  not  the  leading 
object,  is  to  control  the  prices  to  be  charged  by  its  members  for 


357 


stenographic  work  by  restraining  all  competition  between  them." 
The  court  cites  cases  of  which  it  says :  "The  determining  circum- 
stances in  all  of  them  seems  to  have  been  a  combination  or  con- 
spiracy among  a  number  of  persons,  engaged  in  a  particular  busi- 
ness, to  stifle  or  prevent  competition  and  thereby  to  enhance  or 
diminish  prices  to  a  point  above  or  below  what  they  would  have 
been  if  left  to  the  influence  of  unrestrained  competition,"  and 
says:  "All  such  combinations  are  held  to  be  contrary  to  public 
policy  and  the  courts  will  therefore  refuse  to  lend  their  aid  to  the 
enforcement  of  the  contracts  by  which  such  combinations  are 
sought  to  be  effected." 

From  the  nature  of  things,  very  seldom  can  trusts  and  trade 
combinations  on  the  one  hand  or  labor  organizations  on  the 
other,  secure  the  co-operation  of  all  competitors:  and  those  out- 
side the  combination  or  association  are  a  constant  menace,  whom 
the  parties  on  the  inside  usually  seek  to  coerce  in  whatever  man- 
ner may  appear  effectual.  This  is  the  source  of  much  litigation, 
and  is  the  danger  ground  of  the  strike  and  boycott,  to  which  are 
applied  precisely  the  same  principles  as  those  that  control  in 
trusts  and  combinations.  The  strike  and  boycott  are  of  such 
importance  in  this  discussion  of  labor  combinations  as  to  require 
somewhat  extended  treatment. 

The  law  encyclopedia  says :  "The  term  strike  is  applied  com- 
monly to  a  combined  effort  on  the  part  of  a  body  of  workmen 
employed  by  the  same  master  to  enforce  a  demand  for  higher 
wages,  shorter  hours  or  some  other  concession  by  stopping  work 
in  a  body  at  a  prearranged  time  and  refusing  to  resume  work  until 
the  demanded  concession  shall  be  granted."  The  attempt  of 
laboring  men  when  on  a  strike  to  prevent  others  from  talcing  their 
places  has  been  so  frequent  that  it  has  giyen  rise  to  many  deci- 
sions which  have  more  or  less  clearly  defined  the  rights  of  the 
strikers  in  the  premises.  One  in  sympathy  with  a  strike  may 
argue  with  one  who  is  about  to  take  his  place,  or  who  has  taken 
his  place,  and  try  to  persuade  the  latter  that  he  would  best  serve 
Ms  own  interests  and  the  interests  of  his  fellow  men  if  he  refused 
to  work  and  aided  in  making  the  strike  effectual;  but  such  .argu- 
ment and  persuasion  must  not  be  accompanied  by  circumstances 
and  such  a  showing  as  will  amount  to  intimidation. 

The  general  and  prolonged  labor  trouble  on  the  various  rail- 
roads in  1894  gave  rise  to  many  instructive  decisions  relative  to 
strikes,  in  many  of  which  the  courts  discredited  the  strike  and 
rendered  decisions  against  the  railway  employees.  From  a  legal 
standpoint  the  struggle  was  unfortunate  for  the  laborer.  As 
conducted  by  Eugene  V.  Debs,  and  the  American  Railway 


358 


tlnion,  it  was  wrong  in  principle  and  could  not  succeed  in  law. 
The  decisions  of  the  courts  were  therefore  favorable  to  the  rail- 
roads. The  strike  of  1894  was  fought  out  in  the  courts  on  the 
legality  of  the  sympathetic  strike,  and  the  sympathetic  strike 
lost.  No  other  results  ought  to  have  been  expected  from  a  legal 
standpoint.  As  we  have  previously  seen  the  workmen  on  the 
various  railroads  had  the  right  to  quit  their  employment  as  indi- 
viduals, although  their  quitting  was  in  the  nature  of  a  boycott, 
and  was  for  the  purpose  of  coercing  the  railroads  to  help  them  in 
their  fight  against  the  Pullman  company.  The  law  could  not 
inquire  into  their  motive  as  long  as  they  acted  as  units,  but  they 
passed  out  of  the  realm  of  individual  action  and  confederated  to 
act  as  a  union.  As  a  confederating  body  they  were  without  the 
immunity  granted  them  as  individuals.  Eight  here  the  strike  of 
1894  failed  and  left  the  labor  unions  demoralized  by  an  inev- 
itable defeat. 

The  law  will  not,  if  it  can  help  it,  tolerate  indirection  or  allow 
damages  to  be  done  on  the  excuse  that  it  indirectly  will  be  an 
advantage  in  competition.  The  labor  unions  were  doing  that 
which  was  injuring  the  railroads.  It  was  incumbent  upon  them 
to  show  that  their  action  in  thus  doing  what  would  injure  capital 
and  inconvenience  the  public,  was  justified  by  some  reasonable 
excuse.  Their  excuse  was  an  indirect  one.  Employees  of  the 
Pullman  company  were  on  a  strike  for  higher  wages.  The  vari- 
ous railroads  throughout  the  country  were  carrying  Pullman  cars 
under  contract.  Employees  of  the  railroads  entered  into  the 
strike,  not  because  of  their  own  wages,  or  to  better  their  condi- 
tion. Helping  another  body  of  employees  in  their  struggle  is  too 
remote  a  reason  for  inflicting  the  damage  to  the  railroads  and  the 
public  that  was  necessarily  contemplated.  There  was  no  ele- 
ment of  legitimate  competition,  such  as  an  attempt  to  secure  their 
own  higher  wages.  That  this  position  was  taken  by  the  courts  is 
indicated  in  the  decisions  in  cases  growing  out  of  the  strike. 

In  one  of  the  cases  it  was  said:  "All  the  employees  had  the 
right  to  quit  their  employment,  but  they  had  no  right  to  combine 
to  quit  in  order  thereby  to  compel  their  employer  to  withdraw 
from  a  mutually  profitable  relation  with  a  third  person  for  the 
purpose  of  injuring  that  third  person,  when  the  relation  thus 
sought  to  be  broken  had  no  effect  whatever  on  the  character  or 
reward  of  their  service.  "In  the  celebrated  case  against  Eugene 
V.  Debs,  when  carried  to  the  Supreme  Court,  while  the  court 
would  not  grant  relief  to  Debs,  who  was  sentenced  to  imprison- 
ment, Justice  Brewer,  in  the  course  of  a  lengthy  opinion,  said 


359 


specifically :    "The  right  of  any  laborer,  or  any  number  of  labor- 
ers, to  quit  work  was  not  challenged." 

In  the  heated  conflict  of  the  railway  strike  of  1894,  where 
new  phases  of  legal  action  were  developing,  and  where  it  was 
necessary  to  cope  with  aggravated  conditions,  under  the  stress 
and  hurry  that  usually  attends  cases  requiring  an  injunction, 
some  of  the  courts  overstepped  their  rightful  bounds.  Judge 
Jenkins,  during  that  time,  in  the  United  States  Circuit  Court, 
took  the  position  in  passing  on  the  right  of  employees  to  quit 
service  of  a  railroad  that  "one  has  not  the  right  arbitrarily  to  quit 
service  without  regard  to  the  necessities  of  that  service/'  and  held 
that  "the  duties  of  an  employee  of  a  public  corporation  are  such 
that  he  cannot  choose  his  own  time  for  quitting  the  service,"  and 
held  that  the  right  of  employees  of  a  railroad  "as  the  right  of  bond- 
holders and  shareholders  are  subordinate  to  the  rights  of  the  pub- 
lic and  must  yield  to  the  public  welfare."  This  was  a  case 'where 
the  employees  of  the  Northern  Pacific  Eailroad  Company,  oper- 
ated by  its  receivers,  had  threatened  to  strike,  if  their  wages  were 
reduced,  as  contemplated  by  the  receivers.  An  injunction  was 
granted  whereby  such  employees  were  enjoined  from  doing  many 
things,  such  as  disabling  engines,  interfering  by  force,  and 
threats  "with  those  who  desired  to  continue  in  the  employment, 
and  were  also  restrained  "from  combining  and  conspiring  to  quit 
with  or  without  notice  the  service  of  said  receivers  with  the 
object  and' intent  of  crippling  the  property  in  their  custody,  or 
embarrassing  the  operation  of  said  railroad,  and  from  so  quitting 
the  service  of  said  receivers,  with  or  without  notice,  as  to  cripple 
the  property  or  to  prevent  or  hinder  the  operation  of  said  rail- 
road." In  other  words,  they  were  enjoined  from  striking  to  pre- 
vent a  reduction  of  their  wages.  In  his  discussion,  he  says: 
"This  part  of  the  motion  presents  the  issue  whether  a  strike  is 
lawful.  *  *  "A  strike  is  essentially  a  conspiracy  to  extort 

by  violence.     *     *  "I  know  of  no  peaceable  strike;  I  think 

no  strike  was  ever  heard  of  that  was  or  could  be  successful  unac- 
companied by  intimidation  and  violence.  *  *  "The  strike 
has  become  a  serious  evil,  destructive  to  property,  destructive  to 
individual  rights,  injurious  to  the  conspirators  themselves  and 
subversive  of  republican  institutions."  "Whatever  other  doc- 
trine may  be  asserted  by  reckless  agitators,  it  must  ever  remain 
the  duty  of  the  courts,  in  the  protection  of  society,  and  in  the 
execution  of  the  laws  of  the  land,  to  condemn,  prevent  and  punish 
all  such  unlawful  conspiracies  and  combinations."  This  opinion 
was  not  upheld,  but  it  contains  an  element  of  truth  that  can  not 
well  be  disregarded.  The  higher  court  did  not  take  this  view  of 


360 


^W  gA 


G.  W.  NORTH RUP,  JR. 
P.  E.  DOWE 
BYRON  W.  HOLT 


LAWSON  PURDY 
JOSEPH  NIMMO,  JR. 
JOHN  F.  SCANLAN 


the  strike,  and  so  reversed  the  ease.  Suppose,  however,  in  view 
01  the  violence  and  lawlessness  that  frequently  accompanies  the 
strike,  the  courts  should  take  the  view  of  strikes  in  general  ex- 
pressed hy  Judge  Jenkins.  If  our  contention  is  correct  that  the 
law  only  gives  great  liberty  to  the  individual  and  looks  with  dis- 
favor upon  the  association  or"  comhination  that  seeks  to  destroy 
individual  discretion,  the  courts  could  at  once  punish  the  con- 
federating together  as  a  conspiracy  without  any  change  of  time- 
honored  principles. 

So  far  we  have  been  dealing  with  the  strike  in  its  relation  to 
the  public  policy  of  the  common  law.  None  of  the  cases  above 
cited  were  based  on  the  federal-statute  of  1890,  and  they  must  be 
considered  and  read  with  that  fact  in  mind.  We  now  must  con- 
sider the  effect  of  some  of  the  statutes,  and  particularly  the  effect 
of  the  federal  anti-trust  law  of  July  2,  1890,  on  the  status  of  the 
railway  strike.  Judge  Thayer,  in  granting  a  temporary  injunc- 
tion during  the  strike  of  the  American  Eailway  Union  in  July, 
1894,  made  use  of  the  following  language:  "A  combination 
whose  professed  object  is  to  arrest  the  operation  of  the* railroads 
whose  lines  extend  from  a  great  city  into  adjoining  states  until 
such  roads  accede  to  certain  demands  made  upon  them,  whether 
such  demands  are  in  themselves  reasonable  or  unreasonable,  just 
or  unjust,  is  an  unlawful  conspiracy  in  restraint  of  trade  and  com- 
merce "among  the  states  within  the  act  of  July  2,  1890,  and  acts 
threatened  in  pursuance  thereof  may  be  restrained  by  injunction 
under  section  four  of  the  act."  This  language  is  broad  enough 
to  cover  all  railway  strikes.  The  Circuit  Court  to  which  the  case 
was  appealed  quoted  with  approval  the  language  of  Judge  Thayer 
above  noticed,  but  followed  with  comments  on  the  circumstances 
of  the  particular  case  that  would  indicate  that  the  idea  of  the  boy- 
cott was  strongly  in  the  mind  of  the  court  as  well  as  the  violation 
of  the  federal  law.  Another  case  in  the  federal  court  affords  a 
still  more  sweeping  statement.  In  Waterhouse  vs.  Comer  it  is 
stated :  "It  is  true  that  in  any  conceivable  strike  upon  the  trans- 
portation lines  of  this  country,  whether  main  lines  or  branch 
roads,  there  will  be  interference  with  and  restraint  of  interstate  or 
foreign  commerce.  This  will  be  true  also  of  strikes  upon  tele- 
graph lines  for  the  exchange  of  telegraphic  messages  between  peo- 
ple of  different  states  in  interstate  commerce.  In  the  presence 
of  these  statutes  which  we  have  recited,  and  in  view  of  the  inti- 
mate interchange  of  commodities  between  people  of  several 
states  of  the  Union  it  will  be  practically  impossible  hereafter  for 
a  body  of  men  to  combine  to  hinder  and  delay  the  work  of  the 
transportation  company  without  becoming  amenable  to  the  pro- 

361 


visions  of  these  statutes.  *  *  *  w  "It  follows,  therefore, 
that  a  strike  or  boycott,  as  it  is  properly  called,  if  it  was  ever 
effective,  can  be  so  no  longer."  The  several  courts,  except  the 
United  States  Supreme  Court,  that  heard  the  case  involving  the 
injunction  against  Eugene  V.  Debs  and  others  engaged  in  the 
railway  strike  of  1894,  and  the  proceedings  taken  to  punish  Debs 
for  violation  thereof,  base  their  authority  in  the  premises  upon 
the  federal  anti-trust  law  of  1890.  The  Supreme  Court  consid- 
ered it  unnecessary  to  discuss  the  effect  of  this  law,  for  it  held  that 
the  federal  court  had  authority  to  issue  the  injunction  under  the 
general  powers  committed  to  the  United  States  government  over 
interstate  commerce  and  the  transmission  of  the  mail,  regardless 
of  the  act  of  1890.  We  know  of  no  case  where  the  United  States 
Supreme  Court  has  passed  upon  this  relation  of  the  strike  to  the 
law  of  1890,  but  we  see  no  reason  to  believe  that  the  lower  federal 
courts  have  not  correctly  stated  the  effect  of  this  law  upon  the 
strike.  The  authority  which  this  statute  has  added  to  the  com- 
mon law  is  set  forth  in  a  recent  leading  case  as  follows :  "Con- 
tracts that  were  in  unreasonable  restraint  of  trade  at  common 
law  were  not  unlawful  in  the  sense  of  being  criminal  or  giving 
rise  to  a  civil  action  for  damages  in  favor  of  one  prejudicially 
affected  thereby,  but  were  simply  void  and  were  not  enforced  by 
the  courts.  *  *  "The  effect  of  the  act  of  1890  is  to  render 

such  contracts  unlawful  in  an  affirmative  or  positive  sense  and 
punishable  as  a  misdemeanor,  and  to  create  a  right  of  civil  action 
for  damages  in  favor  of  those  injured  thereby,  and  a  civil  remedy 
by  injunction  in  favor  of  both  private  persons  and  the  public 
against  the  execution  of  such  contracts  and  the  maintenance  of 
such  trade  restraints." 

In  observing  the  important  effect  of  the  federal  anti-trust  law 
of  1890  on  labor  organizations  we  must  not  conclude  that  combi- 
nations of  capital  have  been  less  seriously  affected,  or  the  equality 
of  labor  and  capital  in  the  law  has  been  impaired.  Beginning 
with  a  case  decided  less  than  a  year  after  the  passage  of  the  law 
to  the  effect  that  "a  combination  between  coal  producers  in  one 
state  and  coal  dealers  in  another  to  regulate  prices  of  coal  in  a 
certain  city  *  *  *  "  "is  in  violation  of  the  act  of  Congress 
of  July  2nd,  1890,"  this  law  has  been  successfully  invoked  against 
many  such  industrial  combinations,  and  through  the  decision  of 
the  United  States  Supreme  Court  has  been  used  to  destroy  such 
powerful  railway  organizations  as  the  Trans-Missouri  Freight 
Association  and  the  Joint  Traffic  Association. 

The  fact  that  la,bor  organizations  have  not  suffered  under 
state  anti-trust  laws  does  not  prove  that  these  laws  have  been  more 

.362 


carefully  drav.ni  to  protect  labor  than  the  federal  anti-trust  law. 
Although  about  thirty  states  have  passed  anti-trust  laws  neither 
capital  nor  labor  has  been  affected  by  them,  for  there  has  been  no 
earnest  effort  to  enforce  them;  and  for  this  reason  there  are  few, 
if  any,  decisions  of  the  courts  defining  their  application.  With- 
out such  decisions,  however,  we  can  arrive  at  fairly  definite  con- 
clusions concerning  the  application  of  some  of  these  statutes  with 
their  accompanying  penalties.  •  We  must  keep  in  mind  that  pub- 
lic policy,  outside  of  statute  laws,  shows  little  or  no  inclination  to 
favor. combinations  of  labor  to  regulate  wages  more  than  combina- 
tions of  capital  to  control  prices.  We  will  commence  with  Kan- 
sas. We  may  presume  the  legislators  there  would  be  as  careful 
not  to  injure  the  laboring  men  as  in  any  state.  The  Kansas  law 
contains  the  following  provisions :  "A  trust  is  a  combination  of 
skill  or  acts  by  two  or  more  persons,  firms,  corporations  or  asso- 
ciations of  persons,  or  either  two  or  more  of  them,  for  either,  any 
or  all  of  the  following  purposes:  First,  to  create  or  carry  out 
restrictions  in  trade,  or  commerce,  or  aids  to  commerce,  or  to 
carry  out  restrictions  in  the  full  and  free  pursuit  of  any  business 
authorized  by  the  law  of  this  state."  Such  combinations  are 
"declared  to  be  against  public  policy,  unlawful  and  void.  *  *  ; 
"All  persons,  companies  or  corporations  within  this  state  are 
hereby  denied  the  right  to  form,  or  to  be  in  any  manner  inter- 
ested, either  directly  or  indirectly,"  etc.,  "in  any  trust  as  defined 
in  section  one  of  this  act/'  and  prescribes  the  following  penalty: 
"All  persons,  companies  or  corporations,  their  officers,  agent*, 
representatives  or  consignees,  violating  any  of  the  provisions  of 
this  section,  either  directlv  or  indirectly,  or  of  abetting  or  aiding, 
either  directlv  or  indirectly,  in  any  violation  of  any  provision  of 
this  decree,  shall  be  deemed  guiltv  of  a  misdemeanor  and  shall  be 
fined  not  le«s  than  $100  nor  more  than  $1,000,  and  confined  in 
jail  not  less  than  thirty  day?  nor  more  than  six  months,  and  shall 
forfeit  not  less  than  $100  for  each  and  every  day  such  violation 
may  continue."  The  language  of  the  federal  law,  above  men- 
tioned, which  the  courts  decided  applied  to  labor  organizations 
is.  "Every  contract  combination  in  the  form  of  a  trust,  or  other- 
wise, or  cr>n«piracv  in  restraint  of  trade  or  commerce,"  etc.  The 
Kansas  law  broadens  this  and  in  addition  to  "restrictions  in  trade 
or  commerce"  adds  "or  aids  to  commerce,"  and  then  makes  it 
<reneral  and  sweeping  by  including  "restrictions  in  the  full  and 
free  pursuit  of  any  business  authorized  by  the  law."  If,  there- 
fore, the  court  wa?  correct  which  declared  that  "in  any  con- 
ceivable strike  upon  the  transportation  lines  of  this  country, 
whether  main  lines  or  branch  lines,  there  will  be  interference 


363 


with  and  restraint  of  interstate  or  foreign  commerce."  and  that 
the  federal  law  applies  to  such  strikers,  then  the  Kansas  law 
applies  not  only  to  strikes  that  effect  trade  and  commerce,  but 
all  such  organizations  or  movements  of  workingmen  that  restrict 
the  free  pursuit  of  any  business  authorized  by  law.  The  Kansas 
law  was  evidently  patterned  after  the  Texas  anti-trust  law  of 
1889,  but  the  latter  was  amended  in  1899,  leaving  out  these  fea- 
tures, which  we  have  mentioned.  The  anti-trust  law  of  Louisi- 
ana, New  Mexico,  Nebraska  and  Mississippi  also  include  among 
the  prohibited  agreements  and  combinations  those  that  are  in 
restraint  of  trade  and  commerce. 

Again  it  is  possible  that  the  anti-trust  laws  of  several  stntes 
may  be  used  against  labor  organizations  for  the  reason  that  in 
regulating  the  wage?  of  labor  they  effect  the  price  of  commodi- 
ties. In  People  vs.  Fisher  it  was  said :  "Whatever  dismite?  may 
exist  among  political  economists  upon  the  point,  I  think  there 
can  be  no  doubt  in  a  legal  sen«e  but  what  the  waeres  of  labor  com- 
pose a  material  proportion  of  the  value  of  "manufactured  articles 
"If  journeymen  bootmakers  by  extravagant  demand? 
for  wages  so  enhance  the  price  of  boots  made  in  Geneva,  for  in- 
stance, that  boots  made  elsewhere,  in  Auburn,  for  example,  can  be 
sold  cheaper,  is  not  such  an  act  injurious  to  trade?  *  * 
"Combinations  and  confederacies  to  enhance  or  reduce  the  price 
of  labor,  or  of  any  article  of  trade  or  commerce,  are  injurious. 
They  may  be  oppressive  by  compelling  the  public  to  give  more  for 
an  article  of  necessity  or  of  convenience  than  it  is  worth :  or  on  the 
other  hand  of  compelling  the  labor  of  the  mechanic  for  less  than 
its  value."  The  laws  of  Arkansas,  Indiana  and  Georgia,  which 
are  all  practically  the  same,  include  among  the  "arrangements, 
contracts,  agreements,"  etc.,  which  are  declared  illegal,  those 
"designed,  or  which  tend  to  advance,  reduce  or  control  the  price 
or  the  cost  to  the  producer  or  to  the  consumer  of  any  such  article 
or  product."  This  provision  of  the  law  may  be  found  to  be  as 
far  reaching  in  its  effect  on  the  laboring  man  as  the  provisions 
of  the  federal  anti-trust  law.  "We  have  pointed  out  these  items 
in  the  anti-trust  law?  of  different  state?  as  perhaps  the  most  con- 
snicuou?  example?  of  some  provisions  that  may  be  made  to  apply 
disastrously  to.  labor  associations. 

Tn  some  of  the  anti-trust  laws  combinations  of  labor  are  spe- 
cifically excluded  from  their  operation,  and  in  Illinois  there  is 
this  exception  made  to  the  operation  of  the  law:  "Provided,  how- 
ever, that  in  the  mining,  manufacture  or  production  of  articles  of 
merchandise,  the  cost  of  which  is  mainly  made  up  of  wages,  it 

364 


shall  not  be  unlawful  for  persons,  firms  or  corporations,  doing 
business  in  this  state,  to  enter  into  joint  arrangements  of  any 
sort,  the  principal  object,  or  effect,  of  which  is  to  maintain  or 
increase  wages."  But  the  United  States  Circuit  Court  in  the 
North  Division  of  Texas  in  1897  decided  the  Texas  anti-trust 
law  of  1889  unconstitutional,  as  class  legislation,  because,  among 
other  things,  it  excepted  from  its  provisions,  restrictions  of  com- 
petition in  "agricultural  products  or  live  stock  while  in  the  hands 
of  the  producer  or  ra'iser,"  which  provision,  or  substantially  the 
same  provision,  is  also  found  in  the  laws  of  Arkansas,  Georgia  and 
Indiana.  The  decision  last  referred  to  we  believe  in  certain  par- 
ticulars to  be  somewhat  erroneous  and  we  do  not  consider  it  con- 
clusive, but  the  court  seems  to  support  that  portion  of  the  deci- 
sion mentioned  above  by  good  argument.  The  court  em- 
phasizes the  fact  that  "One  of  the  most  sacred  rights  of  liberty 
is  the  right  of  contract,"  which  these  anti-trust  laws  seek  to 
abridge.  The  court  says,  "The  merchant,  the  manufacturer,  the 
agriculturist,  three  great  classes  of  the  world,  each  dependant 
upon  the  other,  each  entitled  to  the  same  protection  before  the 
law,  each  justly  claims  alike,  under  the  Constitution,  the  right 
of  life,  liberty  and  property."  The  Texas  law  was  declared  to  be 
class  legislation,  because  it  allowed  the  agriculturist  to  make  a 
contract  restricting  competition  but  did  not  allow  the  merchant 
or  manufacturer  to  do  so.  If  this  is  good  law,  might  not  the 
court  by  analogous  reasoning  divide  industry  into  two  classes, 
the  laborer  and  the  capitalist,  and  say  that  a  law  that  allowed  the 
laboring  man  to  make  contracts  restricting  competition,  but  pun- 
ished the  capitalist  for  doing  the  same  is  class  legislation  and  un- 
constitutional? 

We  have  discussed  certain  phases  of  the  law  governing  all 
agreements  and  combinations  that  seek  to  prevent  freedom  of  in- 
dividual action  in  order  to  show  in  a  general  way  the  legal  status 
of  labor  organizations,  and  also  to  prove  that  labor  and  capital 
in  this  particular  occupy  the  same  position  before  the  law.  It  is 
true  certain  expressions,  very  comforting  to  the  laboring  man, 
appear  in  some  of  the  decisions  emphasizing  his  privilege  to  com- 
bine against  the  oppression  of  employing  capital,  which  might 
indicate  that  the  policy  of  the  law  outside  of  statute  law  is  chang- 
ing so  as  to  allow  labor  organizations  more  rights  than  combina- 
tions of  capital  to  control  the  individual  actions  of  their  members ; 
but  such  dicta,  lose  most  of  their  force  when  it  is  noticed  that  they 
occur  in  decisions  that  really  find  against  the  labor  organizations 
on  the  vital  issues  in  the  case,  and  appear  to  be  included  in  the  de- 


365 


cisions  largely  for  tlie  purpose  of  making  the  actual  findings  in 
these  cases  less  disappointing.  We  have  not  noticed  anything  in 
the  law  that  indicates  any  important  distinction  in  public  policy 
so  far  as  it  relates  to  such  organizations  and  combinations  be- 
tween labor  and  capital. 


I.  D.  CHAMBEKLAIN. 

Executive  Committee  Order  Knights  of*  Labor. 

We  read  that  a  certain  man  on  the  road  from  Jerusalem  to 
Jericho  fell  among  thieves  (Christ  used  that  word  instead  of 
kleptomaniacs).  The  priest  and  the  Levite,  representing  the 
prosperity,  aristocracy,  religion  and  legal  ability,  passed  by  on 
the  other  side,  too  holy  and  so  far  above  the  common  herd  that  it 
was  profane,  vulgar  and  irreligious  to  soil  their  clothes  and  fingers 
and  spotless  reputations  by  mixing  with  common  people  who 
work,  and  who  should  have  brains  enough  to  take  care  of  them- 
selves! But  there  passed  a  stranger,  that  hated  Samaritan,  who 
saw  the  man-brother  was  robbed,  wounded  and  half  dead;  and  he 
bound  up  the  -wounds,  took  him  on  the  Samaritan  horse  to  the 
inn,  and  paid  the  bills.  What  a  fool!  The  modern  man  would 
ask:  What  office  is  he  running  for?  Christ  hit  the  evasionist 
with  his  interrogative:  "Who  was  neighbor  to  him  who  fell 
among  thieves?"  In  imitation  of  the  organized  labor  leader  of 
Nazareth,  the  Carpenter's  Son,  who  was  crucified  between  two 
thieves,  because  he  "went  about  doing  good,"  the  order  of  the 
Knights  of  Labor  builded  upon  the  maxim:  "That  is  the  most 
perfect  government,  in  which  an  injury  to  one  is  the  concern  of 
all,"  and  have  gone  out  teaching  the  rights,  of  man,  the  republic  of 
our  fathers ;  and  that  a  government  of  the  people,  for  the  people 
and  by  the  people  should  not  perish  from  the  face  of  the  earth. 
It  is  the  only  prominent  organization  on  earth  that  has  fearlessly 
taught  opposition  to  all  forms  of  violence;  and  labored  to  pro- 
mote an  intelligent  and  independent  use  of  the  ballot,  instead  of 
the  strike  and  the  gun.  This  is  why  it  has  been  the  target  fur 
the  trust,  and  becomes  the  enemy  of  legal  robbers.  These  little 
bands  are  organized  throughout  the  country.  They  meet  in  the 
school  houses  of  Kansas,  in  the  vacant  corn  cribs  of  Nebraska, 
in  the  miners'  cabins  of  the  Eockies,  and  in  the  lodge  rooms  of 
the  East. 

The  handful  of  speculators  and  absorbers  of  labor  products 
are  not  the  people  to  rescue  labor,  or  correct  economic  ills.  The 
four  million  wage-workers  have  been  so  long  on  the  treadmill, 

366 


and  in  the  clash  of  greed  against  greed,  that  they  are  losing  sight 
of  the  Goddess  of  Liberty,  and  their  eye  fails,  except  where  the 
labor  union  holds  the  light  of  hope.  But  the  thirty  millions  of 
farmers  have  remained  closer  to  the  foundation  principles  of  the 
republic,  and  are  the  last  to  forget  the  landmarks  of  human 
liberty.  They  are  the  great  producing  element  of  society,  and, 
therefore,  the  chief  feeding  grounds  of  the  trusts.  When  their 
hogs,  cotton  and  wheat  must  go  on  the  market,  "the  market  is 
off."  When  the  corn  is  all  in  the  hands  of  wealth,  the  market 
and  rates  are  "fixed,"  and  the  speculator  makes  more  than  the 
farmer  got  for  his  crop.  He  sells  his  corn  as  "rejected  corn,"  too 
low  to  be  even  graded,  and  it  turns  up  in  the  next  state  as  a  prime 
quality  of  seed.  I  spent  two  days  in  a  Nebraska  county  seat 
watching  a  battle  to  prevent  a  car  load  of  flax  being  shipped  to  a 
customer  outside  the  elevator  pool,  and  followed  for  months  the 
crushing  out  of  an  independent  grain  buyer,  because  he  gave 
honest  weights.  No  cars  and  an  effort  to  assassinate  came  into 
the  contest,  and  he  was  helpless  in  the  courts.  Milltown,  near 
New  Brunswick,  N.  J.,  with  2,000  people,  workers  in  a  rubber 
shoe  factory- — closed  by  the  trusts,  and  the  homes  were  only 
worth  farm  values.  The  2,000  were  homeless,  but  the  wealth 
was  transferred  to  the  trust.  Overton,  Col.,  had  one  of  the  finest 
oil  refineries,  until  the  Standard  harvested  it,  and  they  are  now 
tearing  down  the  brick  buildings  and  the  thriving  young  city  is 
deserted.  The  farmer  saw  a  large  corn  crop  on  top  of  a  surplus, 
and  ten  million  bushels  in  sight,  and  it  went  on  the  Chicago 
market  for  70  to  75  cents.  Ten  years  later  with  a  crop  failure, 
and  a  foreign  demand,  and  only  a  half  million  in  sight,  corn  sold 
in  Chicago  for  40  to  45  cents.  When  he  asked  the  reason,  he  got 
soup,  flavored  with  over-production,  and  charged  it  to  religion, 
saloons,  the  agitators,  high  and  low  tariff,  or  anything  that  would 
be  a  soothing  syrup,  so  he  could  be  worked  for  another  crop ;  and 
after  a  few  such  games  got  a  mortgage  on  his  farm.  Few  peo- 
ple seem  to  understand  that  one  of  the  secrets  of  the  fight  on  sil- 
ver, including  the  shut-down  of  the  western  smelters,  is  to  bear 
the  minesj  so  the  great  syndicate  can  buy  them  in.  The  farmer 
sees  the  practice  of  law  going  to  a  few  corporation  lawyers,  the 
practice  of  medicine  rapidly  concentrating  to  the  company  doc- 
tor; they  see  what  the  average  merchant  does  not  see,  until  too 
late,  the  department  store  to  become  the  distributer,  and  the  old 
merchant  driving  a  mule  team.  He  sees  this  meeting  to-day 
talking  of  "palliatives"  and  "control"  instead  of  an  open  war 
on  a  giant  evil.  The  genius  who  influenced  the  county  board  to 
build  a  bridge  with  public  money  and  license  him  to  collect  toll; 


and  keep  up  repairs,  got  the  other  bridges  condemned  by  dividing 
the  profits  with  the  chief  spirit  on  the  board.  But  for  the  guns 
of  the  citizens  he  would  have  had  a  fat  job,  and  when  he  suddenly 
quit,  a  valuable  financier  had  left  the  country,  who  might  have 
adorned  the  halls  of  Congress. 

Attorneys  for  these  combinations  simply  ridicule  or  deny  the 
general  facts.  They  appeal  to  your  patriotism;  they  ask  us  to 
worship  the  flag,  even  though  we  are  hungry,  and  they  look  at  us 
as  cranks,  and  our  proofs  as  merely  isolated  cases,  that  have  no 
bearing  in  discussing  the  question.  We,  therefore,  call  up  a 
single  witness,  divesting  it  of  all  possible  personality  and  in  great 
brevity. 

Think  of  a  business  man  going  to  New  Mexico  and  Texas  to 
hire  fifty  men  on  this  agreement:  "We  will  pay  you  $5  a  day, 
pay  all  expenses,  furnish  transportation,  food,  guns,  dynamite, 
and  to  each  one  an  insurance  on  his  life.  Here  is  a  list  of  forty- 
two  men,  in  Wyoming,  that  we  want  killed,  because  they  have 
taken  homesteads  and  planted  their  cabins  where  we  want  to 
feed  our  cattle.  For  each  and  every  one  of  these  men  you  kill, 
each  of  you  shall  have  $50.  We  will  go  along  and  defend  you 
in  the  courts."  They  went,  and  the  wires  were  down,  until  the 
sheriff  and  three  hundred  deputies  cornered  the  gang,  and  then 
the  wires  worked  all  right.  The  president  ordered  the  regular 
army  to  rescue  the  invading  army  from  the  sheriff.  The  two 
witnesses  who  saw  the  murder  of  two  peaceable  citizens  were 
paid  $1,500  and  $1,700  to  fly  to  British  possessions,  with  the 
trust  attorneys,  who  furnished  horses.  But  a  snow  storm  turned 
them  to  Nebraska,  where  they  were  arrested  on  a  trumped-up 
charge  of  selling  whiskey  to  Indians  and  the  government  sent  a 
special  train  to  rush  them  east,  where  the  courts  could  not  find 
them.  One  of  the  prominent  counsel  for  the  defense  said  to  me, 
"The  whole  power  of  the  government  will  be  used  to  clear  these 
men,"  and  they  went  clear.  But  the  trust  papers  and  trust  poli- 
ticians never  refer  to  it.  I  give  it  as  it  has  been  told  on  many  a 
platform,  and  oft  repeated  in  the  press,  but  never  challenged. 
Silence  is  the  safest  polic)'.  Many  of  the  farmers  and  miners  of 
the  Eockies  are  witnesses  with  myself.  A  generation  ago  the 
Senate  Commission  warned  us  of  a  deliberate  attempt  to  make 
the  governing  power  a  function  of  commerce,  and  we  notice  this 
case  as  evidence  that  the  trust  has  clandestinely  entered  the  citadel 
of  the  nation,  and  seized  the  reins  of  government.  The  govern- 
ment must,  therefore,  take  possession  of  the  trust  and  use  it  or 
die. 

In  this  conference  we  discuss  "at"  trusts,  and  daintily  tajk 


all  around  them,  of  classifying  and  placing  them  under  control; 
and  philosophize  on  molecules,  and  evolution  of  trade,  and  the 
benefits  we  can  derive  from  stealing  and  murder,  and  the  plunder 
of  a  people,  all  of  which  is  as  ineffectual  as  a  penal  statute  in 
governing  a.  cyclone.  The  trusts  are  all  related,  and  fully  under- 
stand that  an  injury  to  one  is  the  concern  of  all — see  Vanderbilt's 
holdings.  This  family  of  trusts  owns  the  nation.  It  has  control 
of  nearly  every  line  of  industry,  manufactures,  the  higher  courts, 
carrying  trade,  the  channels  of  thought,  and  pockets  the  prod- 
ucts of  the  soil.  It  has  made  money  the  god,  and  labor  the  slave. 
While  somebody,  on  this  floor,  favoring  one  of  these  engines  of 
modern  commerce,  may  deny  my  statements,  and  call  it  rot,  the 
proprietors  will  laugh  at  the  man  who  is  hired  to  defend  them. 
As  a  whole,  labor,  the  foundation  of  all  national  wealth  and 
greatness,  is  sinking  into  decay,  while  the  political  doctors  seem 
to  imagine  that  transferring  wheat  from  the  Armour  elevators  to 
the  Leiter  transports  is  a  process  of  producing  more  breadstuff, 
and  that  the  collection  of  labor  products  is  a  process  of  creating 
wealth.  The  wise  men  of  the  East  assume  not  to  see  that  the 
homes  are  fast  becoming  unproductive,  and  drifting  into  syndi- 
cate farms,  like  English  estates,  to  be  operated  by  menials.  All 
our  so-called  industrials  are  in  the  trust  family,  now  registering 
at  the  New  Jersey  Hotel,  and  there  seems  to  be  a  trust  on  patriot- 
ism. You  notice  we  are  closing  out  our  stock  of  man's  inalien- 
able rights,  and  we  will  soon  be  prohibited  from  speaking  of  our 
inheritance — -a  right  by  contract  under  the  Constitution. 

What  is  the  quality  of  American  manhood,  politics  and  mor-  • 
ality  when  our  physicians  of  economics  must  call  a  thief  some 
softer  name,  and  when  the  home  is  going,  and  independent 
thought  on  these  lines  is  strangled  in  the  back  yard,  to  prevent 
alarm?-  You  may  call  it  a  dark  picture  that  should  be  concealed. 
W'hen  your  neighbor's  house  is  on  fire,  don't  tell  him,  for  fear  he 
calls  you  an  alarmist  or  a  pessimist.  .We  do  not  yet  accept  as 
the  only  remedy  Senator  John  M.  Thurston's  solution:  "No 
great  reform  comes  but  by  the  sword." 

The  trust  embodies  all  the  evils  that  make  a  nation  the  pest- 
house  of  humanity,  and  is  rapidly  changing  the  republic  to  a 
monarchy.  It  was  generated  in  greed  and  special  privileges,  de- 
fended by  falsehood,  animated  by  robbery,  sanctioned  by  decep- 
tion and  fattens  on  the  sweat  and  toil  of  honest  industry.  It  is 
fed  and  prospers  on  the  blood  of  humanity,  and  its  natural  food 
is  the  wreckage  of  decent  government.  It  was  conceived  in  a 
desire  to  defraud.  It  was  born  of  illegitimate  parentage.  Its 
existence,  in  the  broad  sense,  is  in  defiance  of  the  genius  of  the 


republic,  and  a  blot  on  the  flag  of  our  country.  To  shield  and 
defend  a  monopoly  is  to  give  aid  and  comfort  to  an  enemy  in  time 
of  public  danger,  and  to  treat  them  as  factors  of  advancing  civil- 
ization is  to  compound  a  felony.  "Pushing  foreign  trade"  may 
be  as  selfish  and  murderous  as  highway  robbery.  The  so-called 
trust  or  monopoly  of  to-day  is  a  mutiny  in  society,  an  enemy  of 
the  nation  and  a  conspiracy  against  civilization.  The  good  se- 
cured to  us  by  the  trust  method  is  small,  incidental  and  only  for 
the  benefit  of  the  legal  monster.  The  evils  are  great,  universal, 
national,  loaded  with  decay,  and  fatal  to  a  free  people.  They  are 
made  legal  by  statute,  defended  by  official  dignity  and  for  the  sole 
purpose  of  stealing  the  products  of  labor — the  only  source  of 
national  wealth  and  greatness.  Are  we  to  offer  "palliatives"  and 
decree  where  the  monster  may  feed  next,  or  dare  we  call  a  spade 
a  spade?  Europe  and  America  are  looking  at  the  quality  of  the 
patriotism  assembled  in  Chicago  to-day. 

A  recess  was  taken  until  3  p.  m. 

COMMITTEE  ON  KESOLUTIONS. 

The  committee  on  resolutions  met  at  2  o'clock,  and  Chairman 
Luce  announced  a  sub-committee  of  five  as  follows:  Edward 
Keasbey,  of  New  Jersey,  chairman ;  Cecil  Smith,  of  Texas,  Attor- 
ney-General Gaithers,  of  Maryland,  S.  H.  Greeley,  of  Illinois,  and 
Edward  Eosewater,  of  Nebraska.  There  was  a  long  discussion 
over  the  propriety  of  the  conference  adopting  any  resolutions. 
A  large  majority  of  the  members  expressed  the  opinion  that  no 
resolutions  could  be  passsed  by  the  gathering  under  the  call  is- 
sued by  the  Civic  Federation.  Albert  Shaw,  of  New  York,  and 
W.  W.  Howe,  of  Louisiana,  were  the  only  members  who  spoke  in 
opposition  to  this  argument.  The  call  was  read  and  discussed  at 
length.  Finally  Louis  Post,  of  Illinois,  moved  that  the  commit- 
tee report  to  the  conference  that  under  the  provisions  of  the  call 
issued  it  would  be  improper  for  the  body  to  adopt  a  resolution  of 
any  kind  touching  on  the  subject  under  consideration.  This  was 
agreed  to,  and  Chairman  Luce  was  instructed  to  so  report  to  con- 
ference. 


370 


AFTERNOON  SESSION,   SEPTEMBER  15. 

The  conference  was  called  to  order  at  3 :20  o'clock  by  Vice- 
Chairman  H.  V.  Johnson,  and  David  Ross,  of  the  Illinois  Bureau 
of  Labor  Statistics,  took  the  place  of  E.  E.  Clark,  of  the  Order  of 
Railroad  Conductors,  on  the  program. 

DAVID  ROSS. 

Secretary  Illinois  Bureau  of  Labor  Statistics. 

Whether  this  conference  can  accomplish  anything  beyond 
the  interchange  of  opinions,  or  whether  the  process  of  consoli- 
dating industrial  interests  can  be  interrupted,  or  whether  it  is  wise 
to  attempt  to  interfere,  are  problems  which,  for  the  present  at 
least,  will  probably  remain  to  be  solved. 

Whether  right  or  wrong,  the  opponents  of  the  new  system  of 
industrial  activity  have  acquired  a  temporary  advantage  in  the 
odium  they  have  succeeded  in  attaching  to  the  modern  definition 
of  the  term  "trust."  Eloquent  tongues  and  brilliant  imagina- 
tions are  enlisted  in  the  work  of  coining  new  words  in  which  to 
picture  the  frightful  calamities  which  await  us.  , 

Through  our  own  neglect  we  have  become  the  victims  of  vil- 
lainy, the  playthings  of  power.  Nothing  can  save  us  now  ex- 
cept an  appeal  to  our  neighbors  who  may  happen  to  be  members 
of  law-making  assemblies,  and  the  enactment  of  a  law,  accord- 
ing to  some,  defining  the  ratio  for  the  free  and  unlimited  coin- 
age of  silver;  according  to  others,  through  the  confiscation  of 
rent,  as  proposed  by  the  advocates  of  the  single  tax;  still  others 
favor  the  nationalization  of  all  industry  and  the  municipal  own- 
ership and  control  of  local  monopolies. 

We  are  not  requested  by  our  reformers  to  consider  the  eco- 
nomic causes  which  make  necessary  the  reorganization  of  in- 
dustry upon  a  stronger  and  broader  basis.  We  are  only  asked  to 
believe  that  these  vast  combinations  have  been  and  are  being 
formed  for  the  fiendish  purpose  of  preying  upon  the  necessities 
of  the  people,  and,  while  robbing  them,  secure  in  the  majesty 
of  miffht,  can  afford  to  laugh  at  the  law  and  the  courts. 

The  present  improved  industrial  condition  of  the  world  is 
the  result  of  centuries  of  toil,  energv,  and  enterprise.  Mechan- 
ical and  inventive  genius,  encouraged  by  great  commercial  oppor- 
tunities, has  made  possible  during  the  past  few  years  such  rapid 
changes  in  trade  methods  as  to  fill  the  minds  of  all  with  wonder 

371 


and  some  with  fear.  Genius,  like  air,  knows  no  limitations,  and 
while  the  American  brain  has  proved  most  potent  in  the  per- 
formance of  modern  miracles,  it  is  not  entirely  alone  in  this  re- 
spect. The  federation  of  labor  and  the  combination  of  wealth 
go  hand  in  hand  and  are  found  in  their  most  complete  and  force- 
ful form  only  in  those  countries  where  the  people  are  the  most 
advanced. 

There  is  a  destiny  that  shapes  our  ends,  and  the  evident  fate 
of  the  young  republic  is  to  become  the  future  master  and  helper 
of  the  world.  Industrial  evolution  traces  its  history  from  the 
small  workshop  to  the  factory,  and  from  the  factory  to  the  great 
corporation,  and  from  the  corporation  to  the  so-called  trust  of 
the  present  day. 

Men  who  profess  to  betray  great  apprehension  for  the  rights 
and  liberties  of  the  people  cannot  truthfully  contend  that  these 
various  transformation?  have  operated  to  abridge  any  of  their 
privileges.  On  the  contrary,  there  has  been  a  steadv  and  sub- 
stantial forward  movement.  It  has  "been  further  demonstrated 
that  with  each  succeeding  change  there  has  come,  not  only  a  re- 
•duction  in  the  cost  of  life's  necessities,  but  also  an  increase  in 
the  wages  of  human  labor,  with  other  improved  conditions  of 
•emplovment.  It  would  seem  that  our  latest  form  of  industrial 
•organizations  will  prove  no  exception  to  the  rule,  so  far  as  toil's 
•compensation  is  concerned,  as  wage?  in  the  skilled  and  unskilled 
•occupations  have  recently  advanced  fully  25  per  cent.  This  up- 
ward movement  in  wages  has  not  been  entirely  confined. to  prod- 
uct? manufactured  by  the  trusts.  In  a  few  lines  of  industry 
prices  have  been  advanced  considerably  bevond  the  increase  in 
wages — not  on  account  of  anv  trust  influence — but  due  to  the 
inability  of  manufacturers  to  fill  orders,  many  of  them  for  foreign 
markets.  When  productive  capacity  is  more  fully  developed 
prices  will  again  decline,  but,  under  the  new  system,  not  so  as 
to  seriously  impair  profits  or  affect  wages. 

Engaged  in  a  conte?t  for  the  trade  of  the  world,  and  believ- 
ing that  present  combinations  are  'the  inevitable  incidents  of 
our  industrial  situation,  there  is  no  particular  duty  I  would  im- 
pose on  our  legislative  assemblies  bevond  the  reasonable  regula- 
tion? which  every  civilized  ?tate  reciuires.  As  a  state  enact- 
ment, the  Illinois  anti-trust  law.  a?  amended,  is  the  best  I  have 
?een.  It  make?  lawful  an  advance  in  prices  only  where  it  can 
be  shown  that  such  action  was  taken  for  the  purpose  of  main- 
taining or  increasing  waires. 

The  sympathetic  public  has  alwavs  profe««ed  its  willingness 
to  pay  if  assured  that  labor  gets  its  share.  Men  talk  of  destroy- 


ing  such  combinations  Iby  legal  enactment,  on  the  supposition, 
presumably,  that  it  is  possible  and  desirable  to  return  to  the 
simpler  systems  of  the  past.  Our  development  as  an  industrial 
state  is  the  result  of  trade  conditions  and  opportunities  which  no 
legislative  power  could  anticipate  or  control.  Even  those 
charged  with  the  management  of  great  enterprises  are  seemingly 
powerless,  and  appear  to  be  urged  on  by  some  unseen  and  irre- 
sistible force,  and  yet  an  influence  which  makes  for  better  condi- 
tions. 

While  this  question  is  distinctly  an  economic  one,  the  indi- 
cations now  are  that  it  will  be  given  political  significance.  The 
peculiar  feature  about  this  phase  of  the  case  is  the  attitude  of 
certain  party  leaders  who,  in  the  national  contest  of  1896, 
ascribed  the  horrors  of  that  period  to  low  prices.  Men  who  had 
formerly  favored  free  trade  as  a  means  of  reducing  prices  be- 
came the  most  vigorous  advocates  of  free  silver,  claiming  that  un- 
limited coinage  would  immediately  enhance  values.  In  the  con- 
fusion of  theories  the  wonder  is  that  more  people  were  not  de- 
ceived. 

The  past  two  years  have  been  noted  for  exceptional  activity 
in  all  industrial  and  commercial  lines.  Great  organizations  have 
been  formed  for  carrying  on  the  growing  business  of  the  country. 
During  this  period  the  wages  of  workingmen  have  been  increased 
and  the  hours  of  labor  shortened.  The  application  of  sound 
principles  in  governmental  affairs  has  aided  in  placing  increased 
comforts  within  the  reach  of  every  wageworker  in  the  land.  In 
many  departments  of  industry  there  is  a  scarcity  of  labor.  Yet 
in  the  face  of  these  encouraging  indications — and  they  present 
the  appearance  of  permanency — we  are  asked  by  certain  discon- 
tented disciples  to  believe  that  the  method  of  the  new  business 
era  constitutes  the  greatest  danger  that  confronts  our  republic. 

This  class  of  industrial  pessimists  have  put  upon  their  fear 
and  fancy  the  duty  of  destroying  their  judgment. 

"  Imagination  bodies  forth  the  forms  of  things  unknown, 
*    *    *    *  .  And  gives  to  airy  nothing 
A  local  habitation  and  a  name.  " 

Much  of  the  public  feeling  against  so-called  trusts  is  the 
result  of  misconception.  Certain  people  have  been  educated  to 
think  that  the  combination  of  capital,  like  the  organization  of 
labor,  is  to  consummate  the  schemes  of  plunder  and  oppression. 
This  opinion  not  only  reflects  unjustly  upon  our  motives  as  civil- 
ized beings,  but  it  has  arrayed  against  it  all  the  laws  of  trade. 

It  is  impossible  for  any  combination  of  employers  to  perma- 

373 


nently  fix  the  price  of  any  product  where  the  field  is  open  to  face 
competition.  The  only  sense  in  which  a  trust  could  be  main- 
tained is  where,  by  reason  of  greater  economy  in  production,  the 
product  is  placed  upon  the  market  at  a  price  so  low  that  others 
would  have  no  inducement  to  compete.  Against  this  form  of 
"price  fixing"  the  people  who  consume  would  certainly  have  no 
reason  to  complain.  In  spite  of  all  our  prejudices,  has  this  not 
been  the  tendency? 

When  the  great  railroads  organized  years  ago  the  appre- 
hension prevailed  that  rates  would  be  advanced,  and  the 
calamity  prophets  of  that  day,  like  the  present,  were  painfully 
realistic  in  describing  the  fate  that  was  to  destroy  us.  Trans- 
portation charges  for  freight  are  less  by  two-thirds  now  than 
they  were  prior  to  the  organization,  with  a  corresponding  im- 
provement in  the  service. 

The  independent  refiners  of  petroleum  will  unite  in  declar- 
ing the  Standard  Oil  Company  a  monopoly,  and  yet  it  cannot  be 
disputed  that  it  was  powerless  to  maintain  prices.  The  reports 
show  that  the  wholesale  export  price  of  oil  has  declined  from  25 
cents  per  gallon  in  1871,  to  less  than  6  cents  in  1899.  The  peo- 
ple are  getting  a  better  article  for  nearly  one-fifth  the  former  cost ; 
changes  in  the  process  of  refining  have  saved  the  people  millions 
of  dollars,  without,  it  is  fair  to  presume,  impairing  the  profits  of 
the  company. 

The  oil  and  railroad  interests  of  the  country  have  been  singu- 
larly free  from  labor  disturbances.  As  a  matter  of  recent  his- 
tory, our  most  serious  conflicts  have  been  with  interests  that 
neglected  to  federate.  Labor  leaders  will  agree  that  better  terms 
of  employment  can,  as  a  rule,  he  obtained  from  large  than  from 
small  employers.  Why,  then,  should  we  fear  the  results  of  con- 
solidation? It  is  the  part  of  reason  to  encourage  a  tendency  that 
will  make  possible  higher  wages,  lower  prices,  and  less  hours  of 
labor. 

Workingmen  .who  will  be  expected  to  join  the  crusade  against 
so-called  trusts  should  have  a  care  lest  they  become  the  victims  of 
designing  demagogues  who  would  invoke  the  law  to  punish  those 
who  favor  the  restrictions  which  labor  unions  impose. 


374 


M.  L.  LOCKWOOD. 

President  American  Anti-Trust  League. 

M.  L.  Lockwood,  president  of  the  American  Anti-Trust 
League,  spoke  on  the  subject  of  "Property  Eights  and  Human 
Eights/'  saying : 

We  are  confronted  by  great  questions,  greater,  I  feel,  than 
have  ever  confronted  any  generation  of  men.  Slowly  and  by 
tortuous  route  man  has  pulled  himself  up  to  the  present  stage  of 
civilization,  and  we  now  live  in  the  most  important  age  of  all  the 
centuries;  in  an  age  in  which  the  capability  of  this  man  for  self- 
government  will  be  put  to  a  new  test,  tested  in  that  crucible  of 
absolute  unlimited  supply  of  corrupt  corporate  money  in  our  pub- 
lic life.  Absolute  unlimited  corrupt  money,  because  if  they  may 
be  allowed  to  destroy  competition  and  plunder  the  people,  the 
trusts  and  monopolies  and  railroad  combines  can  afford  to  make  it 
absolutely  unlimited.  From  a  money  standpoint  it  will  pay 
them. 

We  live  in  an  age  of  the  most  marvelous  development,  in  an 
age  in  which  man  has  come  nearer  to  unlocking  the  secrets  of 
nature  than  ever  before,  in  an  age  in  which  he  has  harnessed, 
blocked  and  unloosed  the  lightning  and  has  invented  labor-saving 
machinery  so  perfect  in  its  mechanism  that  it  can  almost  think 
and  actually  talk.  Man  has  more  than  doubled  his  power  to 
produce.  He  has  invented  compressed  air  drills  that  can  strike 
five  hundred  blows  a  minute,  when  he  could  once  strike  only 
twenty-five  a  minute. 

And  yet  corporations  have  claimed  it  all.  Corporations  say, 
"This  is  ours/'  "That  the  marvelous  inventive  genius  of  man 
in  the  creation  and  production  of  labor-saving  machinery  shall 
not  lighten  the  burden  of  man  at  all."  Yes,  and  when  multi- 
plicity of  factories  create  competition  for  man's  labor  and  com- 
petition developed  in  the  supplies  to  man  so  that  he  was  com- 
mencing to  realize  a  benefit,  then. corporations  further  combined 
created  trusts  and  monopolies,  destroyed  competition,  combined 
to  force  man  to  become  a  cog,  a  commodity,  a  serf  to  their  grind 
for  money.  And  when  with  the  help  of  the  compressed  air  drill 
and  with  steam  and  electric  power  it  had  become  possible  for 
man  to  mine  enough  of  the  precious  metals  with  which  to  pay 
his  honest  debts  in  the  coin  of  the  contract  and  walk  uprightly 
and  free  of  debt,  then  the  shylocks  of  the  world  in  secret  and  by 
corrupt  means  demonetized  one  of  the  precious  metals,  thereby 

375 


doubling  the  value  and  purchasing  power  of  the  other,  chaining 
man  to  the  rock  a  more  helpless  slave  to  debt. 

My  friends,  dp  you  recognize  that  under  this  system  of  mo- 
nopolies and  trusts  that  all  of  man's  inventive  genius  and  marvel- 
ous creation  and  production  of  labor-saving  machinery  has  only 
heaped  on  him  a  heavier  burden,  that  a  few  by  the  organization 
of  trusts  and  monopolies  are  becoming  multi-millionaires,  while 
the  burden  upon  the  back  of  man  is  becoming  heavier  and  heavier 
for  him  to  bear?  Do  you  recognize  that  these  great  captains  of 
monopoly  and  finance  under  this  system  to-day  are  absorbing  all 
the  wealth  produced  by  the  people:  and  more,  that  they  are 
annually  absorbing  a  part  of  the  accumulated  wealth  of  the 
nation?  Do  you  recognize  that  annually  tenant  farmers  in 
America  are  increasing  by  thousands;  that  the  property  of  this 
great  nation  is  slowly  but  surely  being  concentrated  in  a  few 
hands, — the  rock  upon  which  old  Rome  and  Greece  and  Carthage 
were  wrecked?  Is  there  no  way  to  call  a  halt  and  turn  back  from 
this  road  to  ruin? 

To-day  we  have  men  with  fine-spun  theories  telling  of  the 
advantages  of  trust  combinations,  telling  us  that  trusts  and  mo- 
nopolies can  lop  off  here  and  lop  off  there  and  make  more  money. 
Money  everything!  Man  nothing!  My  friends;  they  have  gone 
money  mad.  Can  it  be  possible  that  man,  man  made  in  the  like- 
ness of  God,  has  become  so  cheap  that  he  shall  be  ground  under 
this  juggernaut  of  monopolies  and  trusts  that  a  few  may  be- 
come rich  in  money,  rich  in  millions  that  have  already  become  a 
curse  on  their  hands>  a  curse  to  their  sons  and  to  their  daughters, 
a  hindrance  to  the  development  of  that  kind  of  noble  manhood 
and  womanhood  of  which  they  and  the  republic  may  justly  be 
proud? 

My  friends,  we  are  confronted  to-day  by  two  great  forces, 
property  rights  and  human  rights.  And  now  when  property 
rights  assume  the  new  relations  of  perpetual  corporate  owner- 
ship, an  entail,  without  human  heart  or  human  conscience  behind 
it.  what  is  its  power  for  evil?  We  eulogize  Jefferson  fnr  his  deliv- 
ering us  from  the  curse  of  propinquity  and  entail,  and  we  find 
ourselves  now  in  the  grip  of  a  greater  monster.  England  charged 
the  old  East  India  Company  four  hundred  thousand  pounds,  two 
millions  of  dollars,  annually,  for  the  right  to  plunder  the  people 
of  India ;  and  they  would  only  give  fifteen  year?  at  a  time,  at  that. 
But  this  great  republic  of  our?  <riv<>«  the  Standard  Oil  Company, 
the  Sugar  Trust,  the  Big  Four  Beef  Combine,  and  the  re?t  of  these 
little  trusts  the  perpetual  risrht  to  plunder  the  producers  and 
consumers  of  America,  and  doesn't  charge  them  a  cent.  If  the 

376 


Standard  Oil  trust  could  be  secure  in  the  monopoly  they  now 
have,  they  could  well  afford  to  pay  the  government  thirty  mill- 
ions of  dollars  annually  for  the  privilege,  and  cheap  at  that. 

And  here  I  must  digress  for  a  moment. 

I  was  somewhat  surprised  last  evening  to  hear  a  gentleman 
upon  this  floor  tell  an  American  audience  that  Eussia  had  put  a 
protective  tax  of  $2  a  barrel  on  oil  to  keep  American  oil  from  driv- 
ing the  Russian  oil  out  of  Eussian  markets,  and  in  the  very  next 
moment  he  tells  us  that  if  it  had  not  been  for  the  organizing 
genius  of  the  Standard  Oil  Company  people  that  Eussian  oil 
would  have  flooded  the  American  markets  and  dried  up  the 
American  oil  wells  and  shut  down  American  refineries.  Now  that 
is  spreading  it  on  pretty  thick — thicker  than  I  have  been  used  to, 
and  I  have  been  used  to  a  good  deal.  The  gentleman  would 
have  us  believe  that  the  Standard  Oil  Company  have  a  monopoly 
of  the  brain  and  business  capacity  of  America,  but  I  want  to  tell 
the  gentleman  and  you  that  if  it  had  not  been  for  railway  rebates 
and  discriminations  that  there  would  never  have  been  a  Standard 
Oil  trust  monopoly.  I  want  to  say  to  the  gentleman  and  to  you 
that  if  he  will  re-establish  and  maintain  equal  rates  over  the  rail- 
ways of  America  (that  in  spite  of  this  legitimate  evolution  of 
business  that  we  hear  so  much  about),  that  the  energy,  enter- 
prise, courage  and  business  capacity  of  the  American  people  will 
drive  the  Standard  Oil  Company,  with  its  extravagant  methods, 
into  a  secondary  position  in  the  oil  trade  of  America  in  less  than 
ten  years.  Oh,  but  they  say  that  that  would  be  waste,  that  that 
wouldn't  be  evolution  of  business,  that  that  would  be  competi- 
tion, but  I  want  to  say  to  you,  my  friends,  that  competition  is  a 
good  thing  for  the  people  and  a  bad  thing  for  monopoly. 

Yes,  we  are  confronted  by  two  great  forces,  property  right 
and  human  right,  for  the  last  two  hundred  and  fifty  years.  For 
the  last  two  hundred  and  fifty  years  whenever  property  rights 
have  encroached  upon  the  right?  of  man,  man  has  moved  onward. 
He  came  to  America.  Along  the  Atlantic  coast  for  the  last  one 
hundred  and  twenty-five  years,  when  property  rights  have  en- 
croached upon  man,  the  brave  and  the  true  went  west,  and  they 
have  gone  on  and  on  until  they  can  go  no  farther.  And  they 
have  turned  back,  and  to-day  property  rights  and  human  rights 
have  met  upon  the  highway  and  are  combatting  for  the  mastery. 
The  echoes  of  dynamite  from  Shoshone  County,  Idaho,  from 
Cleveland.  Ohio,  and  from  Brooklyn.  New  York,  admonish  us 
that  the  battle  is  on.  It  is  not  of  our  choosing,  but  the  battle 
is  on. 

My  friends,  do  you  recognize  the  gravity  of  the  situation? 

377 


Do  you  recognize  that  a  new  issue  is  unon  us,  the  solution  of 
which  will  take  great  men,  "sun  crowned,  who  live  above  the 
fog,"  men  prompted  by  the  noblest  impulses,  no  money-worship- 
ing men,  no  corporation,  railroad-controlled  men,  will  do;  but 
statesmen  broader  than  the  world  had  ever  known,  noble  men, 
brave  enough  to  hold  the  scales,  appreciating  the  mighty  issues 
of  the  hour;  men  who  can  weigh  and  weigh  justly  human  rights, 
human  flesh  and  human  blood,  human  heart  and  conscience, 
human  hopes  and  human  aspirations  in  the  one  scale,  and  prop- 
erty rights  in  the  other.  This  is  no  work  for  pigmies.  This  is  a 
work  for  giants,  filled  and  prompted  by  the  divine  spirit  of  God. 
Such  men  and  such  men.  only  can  meet  and  solve  tbis  issue  and 
carry  the  republic  upward  and  onward  in  its  mission  for  mankind. 

My  friends,  there  has  been  so  much  cold,  cruel,  corporate  cash 
crept  into  our  public  affairs  that  I  want  to  call  your  attention  to 
the  fact  that  while  manhood  and  land  and  all  unmonopolized 
commodities  are  becoming  cheaper  and  cheaper,  that  almost  all 
corporate  capital  has  nearly  doubled  in  value  in  the  last  three 
years.  Why  is  this?  It  is  because  corporations  have  been  given 
free  rein  to  combine,  to  create  monopolies,  to  create  freight 
traffic  and  passenger  associations,  to  destroy  competition  and  to 
plunder  the  producers  and  consumers  of  America.  That's  why. 

My  friends,  a  freight  traffic  association,  a  trust  or  monopoly 
create  no  wealth.  Freight  traffic  associations  and  trusts  are 
organized  to  take  from  other  men  the  wealth  they  produce  with- 
out giving  them  any  adequate  recompense  in  return.  Wealth  is 
not  created  by  trusts.  Wealth  is  created  by  labor,  by  hard,  untir- 
ing application  of  brain  and  muscle  upon  the  raw  resources  of 
nature.  Trusts  create  no  wealth.  Trusts  and  monopolies,  by 
the  destruction  of  competition,  obtain  power  to  fix  prices  to  the 
producers  and  consumers  and  then  plunder  all  producers  and 
consumers  of  wealth. 

Let  me  illustrate:  Every  man,  woman  and  child  in  America 
that  works,  works,  and  as  a  result  of  this  labor  a  certain  enormous 
amount  of  wealth  is  produced  in  one  year.  Don't  get  away  from 
the  fact  that  freight  traffic  association  and  trust  combines  cre- 
ated none  of  it,  that  labor  created  it  all.  Now  then.  Let  us 
bring  all  this  wealth  that  has  been  created  in  one  year  together 
in  an  enormous  pile  before  us.  Now,  then,  if,  under  this  system 
of  monopolies  and  trusts,  the  Standard  Oil  Company  can  come  in 
and  take  from  this  pile  of  wealth  that  the  people  have  produced, 
say,  fifty  million  dollars'  worth  of  it  annually;  and  if,  under  this 
system  the  Sugar  Trust  can  come  in  and  take,  say,  two  hundred 
million  dollars'  worth  of  this  wealth  that  the  people  have  pro- 

378 


duced  annually;  and  if,  under  this  system,  the  Big  Four  Beef 
Combine  can  come  in  and  take  twenty  millions'  worth  of  this 
wealth  that  the  people  have  produced  annually;  and  if,  under 
this  system,  the  freight  traffic  and  passenger  associations  can 
destroy  competition  and  take  from  this  pile  of  wealth  that  the 
people  have  produced  three  hundred  millions  annually  more  than 
the  law  of  competition  would  give  them;  and  if,  under  this  sys- 
tem, all  of  these  innumerable  trusts  which  now  control  nearly 
every  necessity  of  human  life  can  come  in  and  take  from  this  pile 
of  wealth  that  the  people  have  produced  all  they  can  get  under  this 
infamous  system,  there  is  practically  nothing  left  for  the  people. 
This  system  must  not  go  on.  It  must  stop.  It  is  ruining  our 
institutions  of  government.  It  is  undermining  the  foundation 
stones  of  the  republic.  It  is  uprooting  the  tree  of  liberty  and 
there  is  no  virgin  soil  in  which  to  plant  it  again.  Can  we  not 
join  in  the  restoration  and  maintenance  of  the  doctrine  of  equal 
rights  to  all  and  special  privileges  to  none?  Cannot  we  join  in 
rescuing  our  dear  land  and  country  from  the  curse  of  a  corporate 
oligarchy  of  wealth  upon  the  one  hand  or  the  horrors  of  a  French 
Ke volution  upon  the  other? 

Mark  you,  it  was  the  lion-hearted,  the  cream  of  the  world, 
who  faced  old  ocean's  roar  that  they  might  be  free  and  equal.  If 
we  fail  now,  popular  government  as  our  fathers  planned  it,  is  gone 
and  gone  forever.  Mind  you,  the  brave  are  not  the  small.  They 
would  move  onward  before  they  would  stop  and  quarrel,  but 
drive  them  to  the  wall,  and  then  look  out.  My  friends,  the  brave 
are  at  the  wall  now.  The  monopolies,  the  trusts  and  the  shy- 
locks  have  put  them  there,  and  they  are  fighting  back.  But  this 
military  power,  this  100,000  of  a  standing  army  they  want;  my 
friends,  these  questions  cannot  be  settled  with  a  standing  army. 
This  standing  army  has  already  been  allowed  at  the  behest  of 
this  corporate  conspiracy  against  American  rights  to  arrest  inno- 
cent American  citizens  in  Shoshone  County,  Idaho,  and  put 
them  in  a  bull  pen  without  any  warrant  of  law.  And  this  in  free 
America  under  the  Declaration  of  Independence  and  bill  of 
rights  and  the  Constitution  of  the  land!  My  plea  is  not  for  crimi- 
nals. My  plea  is  for  the  rights  of  American  citizens,  for  there 
is  nothing  so  sacred  between  heaven  and  earth, — aye,  there  is 
nothing  more  sacred/  even  at  the  holy  altar  of  God  than  the  right 
of  American  citizens.  And  yet  we  have  seen  these  rights  trampled 
under  foot  by  this  military  power.  An  outrage  against  an 
American  citizen  in  Idaho  is  an  outrage  against  you.  An  outrage 
against  an  American  citizen  in  Idaho  is  an  outrage  against  every 
Americali  citizen  everywhere.  If  they  can  do  this  thing  in 

379 


Idaho  to-day,  they  can  do  it  here  to-morrow.  This  power  grows 
from  that  upon  which  it  feeds:  The  power  that  is  behind  it  is 
the  selfish  greed  of  corporate  capital.  "Onward  and  onward 
they  go,  determined,  it  seems,  to  drive  the  American  people  to 
destruction ;  to  give  their  roofs  to  the  flames  and  their  flesh  to  the 
eagles."  I  see  men  before  me  who  have  been  reared  in  an  atmos- 
phere of  luxury  who  look  upon  these  words  as  extravagant.  My 
friends,  you  do  not  know  the  heart  beats  of  the  masses  as  I  know 
them.  Now,  then,  what  is  the  remedy? 

One  of  the  most  important  remedies  is  national  ownership  of 
the  highways  of  the  people,  the  railroads.  For  railway  discrimi- 
nation has  been  the  father  of  it  all.  But  how  can  this  great  cor- 
porate conspiracy  against  equal  rights  and  equal  opportunities  be 
checked  and  driven  back?  That  is  the  question  of  the  hour. 
My  friends,  there  is  not  a  monopoly  in  America  to-day  but  has 
been  created  and  maintained  by  railway  discrimination — some 
system  of  favoritism.  These  trusts  and  combines  do  not  have  a 
monopoly  of  the  brains  and  business  capacity  of  the  country. 
Under  the  great  law  of  evolution,  keener  brains  and  brighter 
minds  and  men  with  more  intense  capacity  for  application  to 
business  are  being  produced.  It  is  only  when  trusts  and  monopo- 
lies are  hedged  behind  some  condition  of  advantage  that  they  can 
expect  to  monopolize.  No  one  knows  this  better  than  the  great 
leaders  of  the  trust-monopolies.  They  know  it  so  well  that  their 
greatest  energies  have  been  directed,  not  to  a  matter  of  the  supe- 
riority of  their  goods,  but  as  to  how  they  can  best  manipulate  the 
men  who  control  the  highways  of  the  people  so  that  they  can  go 
over  these  highways  with  their  goods  to  the  practical  exclusion  of 
their  competitors. 

The  bludgeon  that  has  created  all  exporting  monopolies  and 
trusts  is  railway  discrimination,  secret  rebates,  manipulation  of 
cars  and  a  general  effort  on  the  part  of  the  railway  managers  to 
hinder,  humiliate  and  discourage  all  men  whose  tastes  and 
inclinations  lead  them  into  the  channel  of  business  occupied  by 
their  favorites  and  co-conspirators.  This  power  is  also  an  im- 
portant factor  in  maintaining  manufacturing  trusts  that  do  not 
export.  The  fear  of  railway  discrimination,  the  fact  that  all 
moving  spirits  in  these  great  industrial  combinations  stand  close 
to  the  men  who  control  the  highways  of  the  country,  deter  men 
from  putting  their  money  into  enterprises  against  such  desperate 
odds  as  those  created  by  railway  favoritism. 

Then  what  is  the  remedy?  Take  these  railways  away  from 
these  corporations.  Let  the  government  own  and  run  them. 


380 


Under  the  power  of  eminent  domain,  take  them.  Pay  for  them 
just  what  they  are  truly  worth,  llun  them  under  a  department 
of  government  just  as  the  postoffice  is  run  now.  Then  every 
man  can  go  to  market  with  the  products  of  his  labor  just  as  cheap 
as  any  other  man.  Then  equal  rights  and  equal  opportunities 
can  be  reestablished.  But,  says  one,  how  can  the  government  pay 
the  interest  on  this  enormous  public  debt  which  the  purchase  of 
these  roads  will  create?  My  friends,  the  people,  Avho  are  the  gov- 
ernment, are  paying  it  now.  In  excessive  freight  rates  charged 
by  these  corporations  they  not  only  pay  the  interest  on  the 
bonded  debt  of  these  roads,  all  dividends  on  watered  stock,  but 
they  are  paying  hundreds  of  millions  annually  for  the  benefit  of 
monopolies,  trusts  and  favored  shippers. 

One  great  advantage  of  national  ownership  is  that  the  bonded 
debt  necessary  to  purchase  all  these  roads  could  be  placed  by  the 
government  at  from  one  and  one-half  to  three  per  cent  less  inter- 
est annually  than  is  now  being  paid  by  these  corporations  on  their 
bonded  indebtedness.  And  this  great  saving  of  interest  would 
be  an  important  factor  in  cheapening  the  cost  of  transportation 
to  the  people.  By  government  ownership,  the  people  are  only  , 
changing  the  managers  of  their  highways.  And  the  present  man- 
agers have  shown  themselves  unworthy  to  perform  such  a  great 
public  duty.  By  government  ownership,  only,  can  the  equal 
rights  of  the  public  over  these  highways  be  guaranteed  to  the 
people. 

Guarantee  absolute  equality  over  the  highways  of  the  country 
so  that  every  butcher  can  ship  a  carload  of  cattle  just  as  cheap 
as  the  Big  Four  Beef  Combine,  and  the  Big  Four  Beef  Combine 
cannot  hold  a  monopoly  of  the  meat  business  of  America  twenty- 
four  hours.  Guarantee  absolute  equality  over  the  highways  of 
the  country  so  that  the  independent  oil  producers  and  refiners  of 
America  can  go  to  market  just  as  cheap  as  the  Standard  Oil  Com- 
pany people  and  the  wrongs  of  the  Standard  Oil  Company  will 
soon  be  a  thing  of  the  past. 

How  can  this  reform  be  brought  about?  How?  By  creating 
a  great  political  force,  independent  of  party,  independent  of 
party  bosses,  strong  enough  to  drive  from  public  life,  from  legis- 
lative halls,  from  senatorial  chambers,  from  executive  chairs  and 
judicial  benches  the  subservient  tools  of  the  trusts  and  corpora- 
tions and  put  in  their  places  men  whose  hearts  beat  in  sympathy 
with  God's  toiling  millions.  When  you  have  done  this,  the  rest 
is  easy. 

How  can  this  grea.t  political  force  be  created?     By  all  men  of 


all  parties  who  are  opposed  to  trusts  and  monopolies,  organizing 
in  their  respective  counties  and  townships  American  Anti-Trust 
Leagues,  an  organization  interfering  with  no  man's  politics,  an 
organization  the  religion  of  which  is  to  vote  against  men  who  are 
controlled  by  trusts  and  corporations  and  to  vote  for  men  who  are 
prompted  by  impulses  for  the  public  welfare.  Let  the  old  parties 
nominate  their  candidates  and  the  men  of  the  American  Anti- 
Trust  League  will  elect  the  good  ones  and  defeat  the  bad  ones. 

Let  all  men  of  all  parties,  religions  and  creeds,  who  are  opposed 
to  trusts  and  monopolies  and  who  are  in  favor  of  the  great  basic 
principles  of  equal  rights  to  all  and  special  privileges  to  none, 
join  in  the  defense  and  maintenance  of  these  great  fundamental 
principles  of  the  American  republic.  This  is  no  time  for  the 
friends  of  the  principles  to  divide  their  forces.  Let  all  men  who 
love  their  country  better  than  they  do  their  party,  come.  Let  all 
Democrats,  all  Eepublicans,  all  Populists,  all  Prohibitionists, 
come.  Let  all  Knights  of  Labor  men  come.  Let  all  Farmers' 
Alliance  men  come;  let  all  American  citizens  come  and  fight  for 
the  maintenance  of  the  great  principles  of  equal  rights  for 
that  great  principle  of  the  brotherhood  of  man  for  which  the 
lowly  Fazarene  suffered  upon  the  cross,  that  He  might  inculcate  it 
into  the  hearts  of  men.  Come  and  create  a  great  power  strong 
enough  to  drive  from  public  life  all  men,  be  they  Democrats  or  be 
they  Eepublicans,  who  are  opposed  to  these  principles,  and  re- 
establish equal  rights  and  equal  opportunities  to  the  American 
citizenship.  Divided,  you  are  but  as  egg  shells  in  the  hands  of 
the  enemy.  United  you  are  omnipotent.  These  questions  are 
above  party.  They  are  as  broad  as  our  common  country. 

The  weapon  is  in  your  hands.  The  greatest  weapon  in  all 
the  annals  of  time.  It  is  greater  than  gatling  guns,  greater  than 
dynamite — aye,  the  thirteen-inch  guns  may  thunder  from  all 
the  battlements  and  they  are  but  puny  compared  with  your 
weapon,  the  ballot.  Use  it,  and  see  that  it  is  honestly  counted. 
He  who  would  use  dynamite  and  vote  wrong  will  be  damned 
through  all  eternity. 

This  precious  weapon,  it  costs  oceans  of  blood  to  wring  it  from 
the  kings  and  emperors  and  the  aristocrats  of  the  old  world.  Use 
this  weapon  earnestly  and  prayerfully — this  weapon  before  which 
legislators,  congressmen,  senators,  presidents  and  judges  are  but 
as  chaff  in  the  whirlwind. 

Organize  the  American  Anti-Trust  League.  Stand  shoulder 
to  shoulder  with  all  the  sons  of  toil.  Eescue  our  land  and  gov- 
ernment from  the  curse  of  a  corporate  oligarchy  of  wealth. 
Eescue  popular  government  from  the  grave  opening  to  receive 

382 


it.     Carry  the  republic  onward  and  upward  in  its  mission  of  giv- 
ing to  man  an  equal  show  in  the  battle  of  life. 

Do  this  and  you  will  be  blest  of  all  generations  of  men. 

A  photographer  was  given  possession  of  the  stage  and  took  a 
flash-light  picture  of  the  assemblage. 

EDWAED  QTJINTON  KEASBEY. 

Member  New  Jersey  Bar. 

Edward  Keasbey,  of  New  Jersey,  spoke  on  "New  Jersey  and 
Trusts/'  saying : 

New  Jersey  has  been  called  the  mother  of  trusts.  I  have  not 
come  here  to  'maintain  or  defend  them,  for  although  many  of 
them  are  only  a  few  months  old,  they  are  all  big  enough  to  take 
care  of  themselves.  I  'have  come  to  hear  what  is  said  about  them 
outside  of  their  home,  and  to  carry  back  to  people  of  my  own 
state  any  suggestions  you  may  have  to  offer  for  their  regulation 
and  discipline.  At  the  same  time  I  would  like  to  say  a  few  words 
on  her  behalf,  and  to  state  as  clearly  as  possible  the  principles 
upon  which  she  is  acting  in  dealing  with  the  corporations  fgr 
whose  existence  and  conduct  she  is  in  a  measure  responsible. 

It  is  true  that  many  large  corporations  have  been  formed 
during  the  last  few  years  under  the  laws  of  New  Jersey,  and  that 
these  are  called  the  trusts.  The  names  of  many  of  them  are  well 
known.  In  name  and  in  form  they  are  merely  ordinary  corpora- 
tions organized  under  an  old  statute  in  New  Jersey  that  makes 
provision  for  the  formation  of  manufacturing  companies,  but 
their  capital  stock  is  very  large  and  their  names  will  be  recog- 
nized as  those  of  some  of  the  most  notorious  of  the  trusts.  There 
is  the  Standard  Oil  Company,  with  a  capital  of  $100,000,000; 
the  American  Sugar  Eefining  Company,  with  a  capital  of  $75,- 
000,000;  the  American  Woolen  Company,  with  a  capital  of 
$05,000,000;  the  Amalgamated  Copper  Company,  with  a  capital 
of  $75,000,000;  the  Distilling  Company  of  America,  with  a  capi- 
tal of  $125,000,000;  the  Federal  Steel  Company,  with  a  capital  of 
$200,000,000,  and  many  others.  The  whole  number  of  corpora- 
tions organized  between  the  first  of  January  and  the  first  of  August 
of  the  present  year  is  1,636,  and  the  aggregate  of  their  capital 
stock  is  more  than  two  thousand  million  dollars. 

New  Jersey,  indeed,  is  not  the  only  state  in  which  large  cor- 
porations are  formed  for  the  purpose  of  carrying  on  business 

383 


throughout  the  whole  country.  West  Virginia  and  Kentucky 
have  for  a  long  time  afforded  especial  facilities  for  the  formation 
"of  companies  intending  to  exercise  their  powers  in  other  states, 
and  Delaware  has  lately  offered  peculiar  inducements  for  the 
creation  of  such  companies.  In  fact  there  is  hardly  any  state  in 
which  corporations  cannot  be  formed  with  capital  enough  and 
powers  enough  to  become  formidable  rivals  of  the  greatest  of  the 
companies  that  have  been  organized  in  New  Jersey,  and  yet  it 
cannot  but  be  interesting  in  a  conference  of  this  kind  to  inquire 
what  it  is  in  the  laws  or  policy  of  New  Jersey  that  leads  men  to 
turn  to  that  state  for  the  organization  and  protection  of  the  cap- 
ital invested  in  such  great  enterprises. 

Combinations  of  capital  for  the  purpose  of  controlling  the 
market  are  no  longer  made  in  the  form  of  trusts.  They  are  no 
longer  made  by  means  of  agreements  to  refrain  from  competition, 
and  by  placing  the  stock  of  rival  companies  in  the  hands  of  trus- 
tees. When  the  courts  declared  that  such  agreements  and  con- 
spiracies were  invalid  and  the  legislatures  of 'many  states  declared 
combinations  in  the  form  of  trusts  or  otherwise  to  prevent  com- 
petition to  be  unlawful  the  agreements  were  annulled  and  the 
combinations  were  dissolved,  and  men  who  desired  to  unite  their 
interests  under  one  control  formed  corporations  and  transferred 
to  .them  the  stock  or  property  and  business  of  existing  companies. 
It  is  these  corporations  that  we  have  to  deal  with  and  not  with 
agreements  in  restraint  of  trade  or  conspiracies  to  prevent  com- 
petition and  maintain  prices. 

The  results  intended  and  accomplished  by  the  corporations 
may  be  the  same  as  those  intended  by  the  trusts,  but  the  difference 
is  vital  in  its  legal  effect. 

The  corporations  are  in  form  like  other  corporations  and  they 
exercise  the  rights  of  property  which  are  common  to  all  corpora- 
tions, and  indeed  to  all  individuals.  They  differ  from  other 
corporations  only  in  that  they  are  larger  and  more  powerful,  in 
that  they  have  more  capital,  and  have  acquired  the  control  of 
many  separate  enterprises  under  a  single  management,  and  as  a 
consequence  they  do  in  effect  prevent  competition  among  the  sev- 
eral enterprises  under  their  control,  and  tend  to  monopolize,  so  far 
as  is  possible,  the  trade  of  those  enterprises.  It  is  in  these  points 
of  difference  that  they  resemble  the  combinations  made  in  the 
form  of  trusts,  and  it  is  in  these  points  of  difference  that  they 
are  regarded  as  dangerous,  but  in  discussing  the  dangers  and  the 
remedies  it  is  important  to  bear  in  mind,  first,  that  it  is  not  trusts 
or  agreements  in  restraint  of  trade  that  we  have  to  deal  with,  but 
large  corporations,  and  secondly,  that  it  is  not  corporations  as  such 

ssi 


chat  have  aroused  this  anxiety,  but  only  the  fact  that  the  form 
of  organization  has  heen  used  to  avoid  the  effects  of  excessive  com- 
petition and  to  control  so  many  individual  enterprises  as  to  create 
a  single  ownership  and  create  what  is  called  a  monopoly  of  the 
trade  in  which  they  were  engaged.  It  is  the  attempt  to  prevent 
competition  and  create  a  monopoly  that  has  alarmed  the  people 
and  provoked  antagonism.  It  is  for  these  that  remedies  are  de- 
manded. 

It  is  in  view  of  these  facts  that  I  wish  to  inquire  why  it  is  that 
so  many  large  companies  commonly  called  trusts  have  been 
formed  under  New  Jersey's  laws,  and  to  consider  whether  she 
owes  it  to  her  own  people,  or  to  the  country  at  large  to  make 
changes  in  those  laws.  There  has  heen  no  legislation  in  New 
Jersey  against  trusts  as  such.  No  statute  has  heen  passed  de- 
claring combination  and  agreements  by  way  of  trusts  or  otherwise 
in  restraint  of  trade  to  be  unlawful.  When  combinations  of  in- 
dustrial enterprises  became  so  large  as  to  be  formidable,  it  soon 
became  apparent  that  it  was  not  easy  to  find  words  which  would 
apply  to  the  really  formidable  combinations  of  capital  without 
affecting  the  freedom  of  contract  between  individuals  and  mak- 
ing illegal  a  great  number  of  perfectly  harmless  arrangements 
with  respect  to  the'conduct  of  their  trade.  It  seemed  be=t  to  leave 
it  to  the  courts  to  declare  invalid  contracts  which  were  found  to  be 
really  against  public  policy  rather  than  to  pass  laws  in  general 
terms  which  might  hamper  the  liberty  of  individuals  and  restrict 
the  natural  tendency  of  organized  society  toward  combination  of 
effort.  This  tendency  among  the  workingmen  had  been  recog- 
nized and  encouraged  by  the  repeal  of  the  laws  making  it  criminal 
for  them  to  combine  to  obtain  higher  wages  and  this  was  followed 
some  years  after  by  removing  from  the  conspiracy  act  all  refer- 
ence to  acts  injurious  to  trade  or  commerce.  The  question  what 
nets  are  injurious  to  trade  or  commerce  was  considered  too  dif- 
ficult a  question  of  political  economy  to  be  left  to  a  jury  in  a  trial 
for  conspiracy. 

The  first  fact  to  be  noted  in  the  inquiry  into  the  policv  of  New 
Jersey  with  regard  to  corporations  is  that  there  is  nothing  of 
much  consequence  that  is  new  in  her  existing  laws.  The  large 
companies  lately  incorporated  were  organized  under  a  general  law 
which,  in  its  substantial  features,  hns  been  in  force  ever  since 
184fi,  and  which  hn«  been  unchanged  in  anv  very  important  par- 
ticulars during  the  last  twenty-five  vears.  From  a  very  early  time 
it  has  heen  the  policy  of  New  Jersev  to  encourage  the  combina- 
tion of  capital  for  the  promotion  of  industries,  and  charters  were 
freely  granted  for  that  purpose.  There  is  one  that  is  still  in  force 

38?) 


that  was  drawn,  or  at  least  revised,  by  Alexander  Hamilton,  for 
the  formation  of  a  society  for  the  establishment  of  useful  manu- 
factures, with  a  capital  of  one  million  dollars  and  with  power  to 
hold  property  to  the  amount  of  four  millions,  and  with  authority 
to  create  a  city  government  which  was  to  take  the  name  of  the 
great  New  Jersey  lawyer  who  took  part  in  the  formation  of  the 
Constitution  of  the  United  States  and  which  became  the  great 
manufacturing  city  of  Paterson.  Special  charters,  however,  cre- 
ated special  privileges,  and  a  general  act,  as  I  have  said,  was  passed 
in  1846,  and  the  power  to  grant  special  charters  was  abolished  in 
1875,  and  in  that  year  a  revision  of  all  the  general  acts  concern- 
ing corporations  was  made  and  permission  was  given  to  any  per- 
sons to  form  corporations  for  any  lawful  business  or  purpose 
whatsoever.  The  provisions  of  that  act  were  substantially  the 
same  as  those  of  the  earlier  statutes,  and  these  provisions  have 
remained  substantially  unchanged  until  the  present  day.  The 
act  was  drawn  with  the  purpose  of  carrying  out  the  settled  policy 
of  the  state  to  encourage  the  aggregation  of  capital  for  promoting 
manufactures  and  developing  the  resources  of  the  state.  It  was 
recognized  that  the  efforts  and  the  means  of  individuals  were  in- 
adequate to  large  undertakings,  and  that  provision  must  be  made 
for  combining  the  resources  of  many  without  risk  of  individual 
liability,  and  corporations  were  regarded  as  a  means  of  accom- 
plishing this  result. 

The  earlier  acts  contained  a  provision  for  filing  statements 
every  year  of  the  condition  of  the  companies,  and  their  assets 
and  liabilities,  but  this  was  omitted  from  the  act  of  1875.  It  was 
considered  that  the  publication  of  such'  a  statement  might,  under 
many  circumstances,  be  disastrous  to  the  business  and  that  such 
a  requirement  would  not  be  tolerated  with  respect  to  the  business 
of  individuals.  Provision  was,  therefore,  made  that  stockholders 
should  have  access  at  all  reasonable  timers  to  the  books  of  the 
company,  and  they  were  given  power  to  make  such  regulations 
as  they  saw  fit  for  the  conduct  of  the  business,  but  no  obligation 
was  laid  upon  the  company  to  make  known  to  the  public  or  its 
rivals  the  precise  condition  of  its  affairs.  In  this  ro>pect  the 
policy  of  New  Jersey  differs  from  that  of  many  other  states,  and 
in  this  conference  publicity  is  suggested  as  a  safeguard  against 
the  dangers  of  the  large  corporations  called  trusts.  "Without  ar- 
gument now,  I  wish  only  to  emphasize  that  the  policy  of  New 
Jersey  was  adopted  nearly  twenty-five  years  ago  with  a  view  to  the 
government  carrying  on  business  within  her  own  borders.  It  is  a 
part  of  her  policy  of  treating  corporations  as  associations,  of  indi- 
viduals for  business  enterprises  and  dealing  with  them  as  it  deals 


with  individuals  and  partners  in  the  conduct  of  their  affairs;  seek- 
ing rather  the  protection  of  stockholders  and  creditors  and  the 
security  of  the  money  invested  than  the  regulation  of  the  busi- 
ness in  the  interest  of  the  general  public.  If  now,  under  changed 
conditions,  when  her  corporations  have  become  so  large  as  to  af- 
fect the  industries  of  the  whole  country,  it  shall  seem  best  to 
make  special  provisions  for  the  protection  of  the  interests  of  the 
public,  New  Jersey  will  be  glad  to  join  with  other  states  in  such 
provisions  as  shall  be  found  best  to  accomplish  this  purpose. 

New  Jersey  from  the  earliest  times  has  adopted  the  policy 
of  promoting  rather  than  hindering  the  aggregation  of  capital 
for  business  purposes  and  from  the  beginning  corporations  have 
been  regarded  not  as  hostile  to  the  public  interests,  but  as  a  means 
of  combining  the  efforts  and  resources  of  individuals  to  accom- 
plish large  undertakings. 

It  was  the  same  under  the  act  of  1846  as  it  is  to-day.  No 
public  notice  of  the  intention  to  form  a  corporation  need  be 
given.  No  petition  need  be  presented  to  the  governor  nor  to  any 
official  for  leave  to  incorporate,  nor  was  it  made  necessary,  as  in 
Pennsylvania,  for  example,  to  obtain  letters  patent  from  the  gov- 
ernor. No  limit  was  placed  upon  the  amount  of  the  capital  stock. 
It  was  not  until  1883  that  any  tax  was  imposed  upon  the  fran- 
chise or  privilege  of  incorporating,  and  then  the  tax  was  a  mod- 
erate one,  imposed  not  for  the  purpose  of  restricting  the  corpo- 
rations, but  rather  to  compel  them  to  contribute  to  the  payment 
of  the  expenses  of  the  government.  It  was  in  1884  that  an  an- 
nual tax  was  first  laid  upon  the  franchise  of  corporations  of  cer- 
tain classes  and  both  of  these  acts  have  remained  substantially 
unchanged.  The  amount  of  the  tax  was  fixed  with  reference  to 
the  needs  of  the  state  and  the  conditions  of  corporations  organized 
for  business  within  her  own  borders,  and  it  is  certain  that  it  had 
no  reference  to  the  organization  of  the  so-called  trusts,  which  did 
not  begin  until  many  years  afterwards. 

It  was  assumed  in  the  earlier  statutes  that  the  business  of  the 
company  would  be  carried  on  within  the  state,  but  there  was  no 
requirement  that  any  of  the  directors  except  the  president  should 
reside  there,  and  as  early  as  1865,  it  was  expressly  declared  by 
statute  that  any  company  might  on  certain  conditions  carry  on 
a  part  of  its  business,  and  have  offices  and  hold  property  outside 
of  the  state,  and  it  was  in  1875,  when  special  privileges  of  every 
kind  were  abolished,  that  the  act  was  passed  that  made  it  easy  for 
persons  residing  beyond  the  borders  of  the  state  to  associate  them- 
selves for  business  purposes  as  a  corporation  under  the  laws  of 
New  Jersey.  This  act  declared  that,  if  the  by-laws  should  so  pro- 

387 


vide,  the  directors  of  any  company  might  have  an  office  and  keep 
the  books  (except  the  stock  and  transier  books)  outside  of  the 
state,  on  condition,  however,  that  they  should  always  maintain  a 
principal  office  within  the  state  and  have  an  agent  in  charge  there- 
of, and  the  chancellor  and  the  judges  of  the  Supreme  Court  were 
empowered,  upon  good  cause  shown,  to  make  a  summary  order  for 
bringing  all  the  books  within  the  state  upon  pain  of  contempt 
and  forfeiture  of  the  charter. 

There  is  one  provision  of  the  present  statute  of  New  Jersey 
which  is  regarded  as  responsible  for  the  combination  of  many 
companies  in  one  and  the  existence  of  the  so-called  trusts  under 
her  laws.  This  is  the  act  which  declared  that  it  shall  be  lawful 
for  any  corporation  organized  under  the  laws  of  the  state  of  New 
Jersey  to  purchase,  hold  and  sell  the  stock  or  bonds  of  any  other 
corporation  in  the  same  manner  as  an  individual  may  do. 

This  act,  moreover,  was  not  passed  until  1893,  a  year  after  a 
similar  act  was  passed  in  New  York,  and  some  of  the  largest  of  the 
•  trusts  came  to  New  Jersey  from  New  York  before  1892,  on  the 
advice  of  counsel  that  corporations  in  New  Jersey  under  their 
general  power  to  hold  such  property  as  was  proper  for  the  purposes 
of  their  business,  might  purchase  and  hold  the  stock  of  other 
corporations  engaged  in  a  similar  business. 

Another  important  feature  in  the  laws  of  New  Jersey  in  view 
of  the  present  tendency  to  the  undue  inflation  of  capital  is  the 
fact  that  stock  may  be  issued  for  property  purchased  and  that 
in  the  absence  of  fraud  in  the  actual  transaction  the  judgment  of 
the  directors  is  accepted  as  conclusive.  The  issue  of  stock  for 
property  was  authorized  by  the  act  of  1875,  which  required  that 
the  property  should  be  taken  at  a  fair  and-bona  fide  valuation,  and 
it  was  the  courts  that  established  the  rule  that  in  deciding  whether 
the  stock  was  fully  paid  or  not,  the  question  is  whether  the  trans- 
action was  an  honest  one  or  not,  judged  upon  the  facts  as  they 
appeared  to  the  directors  at  the  time  the  purchase  was  made  and 
not  in  the  light  of  subsequent  experience.  The  courts  will  have 
still  the  power  to  declare  that  a  gross  overvaluation  of  property 
is  not  bona  fide  and  to  set  aside  the  purchase  for  fraud. 

Other  features  of  the  corporation  laws  of  New  Jersey  are  in 
the  main  not  unlike  those  of  the  other  states. 

The  chief  points  of  difference  in  actual  policy  between  New 
Jersey  and  a  majority  of  the  states  relate  to  the  supervision  of 
the  business  in  the  interest  of  the  public,  and  the  modes  and  ex- 
tent of  taxation.  On  both  of  these  points  the  policy  of  New  Jersey 
was  established  many  years  ago,  and  it  was  not  until  the  opposite 
policy  in  other  states  had  been  carried  so  far  as  to  become  oppres- 


sive  that  persons  began  to  seek  the  benefit  of  organization  under 
the  laws  of  New  Jersey. 

The  chief  characteristic  of  this  policy  of  New  Jersey  is  that 
it  is  a  policy  of  encouraging  rather  than  discouraging  the  aggre- 
gation of  capital.  It  regards  the  corporation  as  a  means  of  bring- 
ing the  savings  of  many  into  efficient  use  as  capital  for  the  devel- 
opment of  resources  and  the  promotion  of  industry.  It  treats  the 
corporation  as  an  association  for  the  purposes  of  business,  deals 
with  it  as  it  deals  with  individuals  and  partnerships  in-the  conduct 
of  their  affairs  and  holds  that  the  largest  possible  freedom  of  the 
individual  is  for  the  best  interest  of  the  community.  It  is  this 
settled  policy  of  the  state,  and  not  any  recent  legislation  intended 
for  the  purpose,  that  has  caused  the  formation  of  so  many  corpo- 
rations in  New  Jersey. 

Another  important  fact  in  determining  the  choice  of  the 
domicile  of  a  corporation  is  the  permanence  or  stability  of  the 
legislative  and  judicial  policy  of  the  state.  Few  changes  have 
been  made  in  the  statutes  of  New  Jersey  during  a  long  period  and 
these  were  made  along  the  lines  of  development  already  laid  down. 
The  decisions  of  the  courts  also  have  been  consistent  and  uniform. 

I  may  add  that,  perhaps,  the  convenient  situation  of  New  Jer- 
sey between  two  great  cities  may  be  the  real  reason  why  many  cor- 
porations come  to  her  instead  of  to  other  states  having  a  similar 
policy. 

It  is  perfectly  clear  that  the  corporations  called  trusts  are 
merely  associations  of  individuals  in  joint  stock  companies  pur- 
chasing and  owning  property  and  carrying  on  business  under  the 
ordinary  powers  that  have  been  freely  granted  to  all  who  chose  to 
organize  as  corporations  and  under  laws  that  have  been  in  force 
for  many  years. 

In  any  practical  discussion  of  the  question  of  the  nature  and 
effect  of  these  combinations  and  of  the  remedies  to  be  applied  it  is 
necessary  to  consider  the  laws  under  which  the  large  corpora- 
tions are  formed  and  to  ask  what  changes,  if  any,  should  be  made 
in  the  laws  that  govern  them.  In  view  of  the  fact  that  so  many 
of  them  have  been  organized  in  New  Jersey,  it  is  natural  that 
New  Jersey  should  be  asked  how  she  can  justify  the  fact  that 
she  permits  and  even  encourages  the  formation  of  corporations 
which  apparently  accomplish  the  same  result  as  the  forbidden 
trusts  ? 

The  fact  is  that  New  Jersey  has  not  attempted  to  .give  an  an- 
swer to  this  question.  She  has  simply  acted  under  the  well  es- 
tablished policy  of  encouraging  the  aggregation  of  capital  for 
business  purposes,  and  has  found  herself  suddenly  confronted 


with  a  new  condition  arising  out  of  an  unexpected  development 
•  in  the  world  of  trade  and  industry. 

The  difficulty  is  that  there  is  nothing  really  new  in  the  situ- 
tion,  except  the  extraordinary  size  of  the  corporations,  the  large 
amount  of  property  controlled  and  the  vast  extent  of  their  enter- 
prises. Their  appearance  is  alarming,  hut  after  all  the  size  is 
only  the  result  of  unduly  rapid  growth,  and  it  is  not  easy  at  once 
to  devise  means  to  check  over-growth  without  risk  of  destroying 
the  life.  Combination  of  capital  has  become  a  necessary  part  of 
the  social  organization,  and  it  is  hard  to  stop  it  at  any  particular 
point  in  its  development. 

It  is  true  that  every  state  may  limit  the  sphere  of  the  action  of 
its  corporations.  It  may  decline  to  give  them  power  to  hold  prop- 
erty or  carry  on  business  outside  of  its  own  borders,  it  may  confine 
the  privileges  of  incorporation  to  its  own  citizens,  it  may  com- 
pel their  directors  to  hold  their  meetings  and  transact  their  busi- 
ness within  the  state,  it  may  even  limit  the  amount  of  property 
which  they  shall  acquire,  but  unless  it  is  willing  to  adopt  this 
policy  of  close  restriction,  it  cannot  control  the  extent  of  the 
business  that  they  shall  carry  on,  or  the  number  of  rival  manu- 
factories that  they  shall  absorb. 

New  Jersey  might  insist  on  the  close  supervision  of  corporate 
business,  require  the  filing  of  detailed  reports  of  debts,  assets  and 
earnings.  She  might  levy  taxes  in  such  a  way  as  to  expose  the 
company  to  the  extortion  of  officials,  or  to  make  its  business  un- 
certain and  the  burdens  oppressive,  but  these  are  questions  of 
local  policy  which  concern  her  dealings  with  all  her  corporations 
and  they  are  not  to  be  settled  with  a  view  only  to  the  effect  of  her 
policy  upon  the  acquisition  of  property  and  the  control  of  business 
in  other  states. 

On  this  point  I  may  say,  moreover,  that  the  state  tax  is  not 
unusually  low,  and  that  under  her  laws  as  they  now  stand,  im- 
posing a  moderate  and  certain  tax  on  the  capital  stock  issued, 
few  companies  survive  which  are  not  engaged  in  actual  and  profit- 
able business,  and  many  apparently  large  companies  formed 
merely  for  the  purposes  of  the  promoters,  are  wound  up  every  year 
and  their  franchises  declared  at  an  end. 

With  respect  to  the  publication  of  reports  of  debts  and  earn- 
ings, she  may  well  take  the  ground  that  the  requirements  of  the 
stock  exchange  are  more  efficient  than  statutes  in  securing  to  the 
public  a  proper  acquaintance  with  the  condition  of  such  corpo- 
rations as  are  of  public  concern,  but  if  it  be  found  that  there  are 
companies  that  in  fact  have  becoTpe  PO  large  as  to  control  any  large 
branch  of  industry  throughout  the  country  and  whose  stock  is 

390 


purchased  for  investment  by  a  very  large  number  of  perso-ns  who 
have  not  ready  access  to  the  books  of  the  company,  so  that  the 
condition  of  the  company  is  in  fact  a  matter  of  public  concern, 
it  would  be  wise  for  the  state  itself  to  require  that  the  condition 
of  its  affairs  and  the  methods  of  its  management  should  be  made 
known  to  the  public  not  merely  in  reports  made  to  the  annual 
meeting,  but  also  in  detailed  statements  filed  in  the  office  of  the 
Secretary  of  State  and  printed  in  some  public  journal. 

One  of  the  most  important  provisions  of  the  laws  of  New  Jer- 
sey in  its  relation  to  the  formation  of  large  combinations  is  that 
which  permits  the  purchase  of  stock  of  other  corporations.  It 
was  under  this  that  the  Standard  Oil  Trust  and  other  trusts  were 
reorganized  as  corporations  in  New  Jersey,  but,  as  I  have  said, 
the  same  provision  was  adopted  in  New  York  as  early  as  1892  and 
has  since  been  Adopted  in  many  other  states,  and  this  privilege  is 
not  necessary  to  the  combination  of  several  companies  into  one. 

One  of  the  inducements  to  the  promotion  of  large  corporations 
and  the  combination  of  industrial  properties  is  the  inflation  of 
stock,  and  the  creation  of  fictitious  stock  is  one  of  the  most  serious 
evils  of  the  whole  movement.  This  can  be  discouraged,  though 
not  wholly  prevented,  by  the  requirement  that  nothing  but  money 
shall  be  taken  in  payment  of  capital  stock.  The  laws  of  New  Jer- 
sey provide  that  stock  may  be  issued  for  property  purchased,  and. 
.the  property  must  be  put  in  at  a  fair  and  Tjona  fide  valuation,  and 
in  such  a  case  it  is  impossible  wholly  to  prevent  undue  inflation  of 
the  stock,  but  the  true  remedy  is  not  in  forbidding  the  issue  of 
stock  for  property  purchased,  nor  even  in  limiting  it  strictly  to  the 
value  of  the  property.  Some  allowance  must  be  made  for  the 
earning  power  of  the  property  and  business  under  the  control  of 
the  new  corporation  and  some  inducement  of  a  speculative  na- 
ture must  be  given  to  tempt  capital  into  new  and  doubtful  enter- 
prises. It  is  stockholders  and  creditors  that  are  chiefly,  interested 
in  knowing  what  the  property  for  which  the  stock  is  given  is 
really  worth,  and  they  have  full  protection  if  they  can  ascertain 
what  that  property  really  was.  The  English  plan  is  to  punish  pro- 
moters severely  for  issuing  a  false  prospectus,  and  to  require  the 
contract  for  the  purchase  of  the  property  to  be  written  in  detail 
and  give  to  anybody  the  right  to  obtain  a  printed  copy  of  it  for 
sixpence. 

Holding  promoters  strictly  to  account  would  go  far  toward 
preventing  fraudulent  prospectuses  and  if  every  creditor  or  pur- 
chaser of  stock  could  demand  and  have  a  full  statement  of  the 
basis  of  the  issue  of  the  stock,  he  would  have  no  just  cause  to  com- 
plain if  he  remained  in  ignorance  of  the  facts.  If  these  should  not 

391 


be  sufficient,  there  femains  the  Massachusetts  plan  of  requiring 
the  contract  for  the  issue  of  the  stock  to  be  submitted  to  a  public 
otlicer  for  his  approval,  but  there  are  dangers  in  this  and  it  is  not 
in  keeping  with  the  New  Jersey  democratic  idea  of  freedom  from 
official  intervention  in  business  affairs.  When  the  issue  of  stock 
is  based  upon  public  franchises,  as  in  the  case  of  companies  using 
the  public  streets,  stringent  provisions  should  be  made  against 
inflation  of  the  stock,  and  this  has  been  attempted  in  the  statutes 
of  New  Jersey  relating  to  street  railways,  but  the  provisions  have 
been  evaded  by  taking  advantage  of  certain  statutes  providing 
for  combination  of  existing  companies  and  the  fixing  of  the 
amount  of  the  stock  of  the  new  company  without  reference  to  the 
actual  stock  of  the  old  ones.  These  acts  I  think  ought  to  be  re- 
pealed. 

Whatever  the  remedies  may  be  for  the  undue  growth  and  in- 
creasing power  of  corporations  they  must  be  directed  to  the  pre- 
cise evils  which  it  is  sought  to  remove  and  not  to  the  general 
principle  of  combination  of  capital  in  joint  stock  companies  We 
must  be  careful  that  in  removing  the  evils  we  do  not  destroy  what 
is  good.  We  cannot  attack  in  this  stage  of  the  world's  history  the 
principle  of  combination  or  corporation. 

We  cannot  follow  the  suggestion  that  was  made  upon  this 
'  floor  that  since  the  trusts  are  in  fact  corporations,  we  must  abol- 
ish corporations  for  the  purpose  of  putting  an  end  to  the  trusts. 
It  is  by  means  of  corporations  that  we  are  able  to  combine  the 
resources  of  many  for  the  great  undertakings  that  are  necessary 
to  commerce  and  industry,  and  until  we  find  some  better  means 
of  combination  we  cannot  destroy  those  that  we  have. 

For  the  same  reason  we  shall  not,  if  we  are  wise,  adopt  as  a 
remedy  against  the  evils  of  the  trusts,  such  regulations  of  corpo- 
rations as  are  merely  vexatious  and  harassing  and  tend  to  cripple 
or  to  discourage  combinations  for  proper  purposes.  And  certain- 
ly we  cannot  adopt  the  remedy  suggested  by  a  speaker  who  has 
preceded  me,  making  every  stockholder  responsible  for  all  the 
debts  of  the  company.  This  would  make  combination  in  corpo- 
rate enterprises  possible  only  for  the  very  rich  or  those  who  have 
nothing  to  lose. 

If  the  size  of  the  corporations  and  the  amount  of  the  property 
they  control  are  the  sources  of  the  dangers  that  are  feared,  these 
can  be  limited  by  law. 

The  purposes  for  which  corporations  may  be  organized  may 
be  restricted  and  the  business  they  are  authorized  to  carry  on 
may  be  strictly  defined.  Legislation  in  this  direction  may  be 
taken  without  striking  at  the  principle  of  combination  in  discour- 
se 


aging  the  organization  of  corporations  for  proper  purposes  and 
with  reasonable  powers. 

Legislation  against  the  large  corporations  as  combinations 
in  restraint  of  trade  is  of  little  avail.  It  has  failed  to  reach  the 
corporations  already  organized. 

In  Xew  Jersey  it  has  been  held  that  in  a  collateral  proceeding 
the  court  of  chancery  has  no  power  to  restrain  a  corporation  or- 
ganized under  the  forms  of  law  from  performing  acts  within  its 
corporate  power  merely  because  the  puruose  of  its  incorporation 
may  have  been  to  prevent  competition  and  establish  a  monopoly, 
and  in  a  very  recent  case  in  the  court  of  errors,  it  has  been  held 
that  although  contracts  in  restraint  of  competition  in  the  produc- 
tion of  some  commodity  in  the  production  and  sale  of  which  the 
public  have  an  interest  are  contrary  to  public  policy,  yet  when 
such  agreements  result  in  the  formation  of  a  corporation  with 
the  powers  conferred  under  the  liberal  statutes  of  New  Jersey, 
it  may  lawfully  buy  the  business  of  its  competitors  and  the  courts 
cannot  pronounce  a  contract  for  such  permitted  purchases  invalid, 
although  it  may  tend  to  produce,  and  may  temporarily  produce 
a  monopoly. 

The  court  assumes  that  an  agreement  among  independent 
dealers  to  combine  for  the  purpose  of  maintaining  prices  by 
avoiding  competition  and  limiting  production  is  against  public 
policy,  but  while  it  is  well  settled  that  contracts  in  general  re- 
straint of  trade  are  void  and  not  to  be  enforced,  it  is  not  true 
that  at  common  law  such  contracts  are  unlawful,  and  if  this  be  so 
then,  even  though  the  agreement  by  which  it  is  formed  be  against 
public  policy,  it  cannot  be  said  that  the  corporation  is  the  re- 
sult of  an  agreement  that  was  unlawful. 

It  has  been  insisted  that  corporations  which  control  the  mar- 
ket may  be  held  to  be  illegal  as  creating  monopolies,  but  no  ordi- 
nary corporation,  however  large,  possesses  a  legal  monopoly,  and 
the  monopolies  that  were  declared  illegal  at  common  law  were  the 
royal  grants  giving  special  privileges  to  individuals  or  corpora- 
tions. The  truth  is  that  there  is  no  real  monopoly  without  special 
privilege,  and  so  long  as  there  is  perfect  freedom  of  competition, 
no  actual  monopoly  can  be  obtained.  There  may  be  an  appear- 
ance of  monopoly,  but  the  courts  cannot  deal  with  an  appearance, 
and  it  will  be  found  in  the  long  run  that  competition,  or  at  least 
the  possibility  of  competition,  will  prevent  any  group  of  individ- 
uals, however  they  may  combine  themselves  together,  from  ob- 
taining the  actual  and  permanent  control  from  an  open  market. 

Before  asking  that  a  radical  change  should  be  made  in  a  long 
established  policy  of  law  relating  to  corporations,  it  should  be 

393 


shown  clearly  that  these  results  do  follow  the  organization  of 
corporations  under  those  laws.  When  definite  action  is  demand- 
ed, the  burden  of  proof  is  upon  those  who  assert  that  it  is  required, 
and  for  want  of  the  statement  of  such  facts  I  am  inclined  to  think 
that  we  exaggerate  the  dangers  of  the  situation. 

The  conditions  of  trade  and  manufacture  are  very  different 
from  what  they  have  been.  The  extent  of  the  territory  that  can 
be  profitably  occupied  has  become  much  greater  and  larger  under- 
takings can  now  be  more  easily  controlled  under  a  single  manage- 
ment. 

The  great  combinations  of  capital  are  new,  and  there  has  not 
yet  been  time  to  ascertain  by  experience  what  is  the  actual  effect 
of  uniting  many  enterprises  for  the  purpose  of  reducing  the  cost 
of  production  and  regulating  the  prices  of  commodities. 

The  obvious  effect  is  to  reduce  competition  and  it  is  competi- 
tion that  has  been  the  ruling  force  in  the  struggle  for  existence 
in  the  commercial  and  industrial  world.  We  have  not  yet  had  ex- 
perience of  the  effects  of  combination  on  a  large  scale.  Nor  do 
we  know  whether  in  the  removal  of  competition  there  may  not 
come  the  saving  of  ill-directed  energy,  the  regulation  of  supply  in 
accordance  with  the  demand  both  in  place  and  in  time,  a  saving 
in  the  cost  of  production  and  a  steadiness  and  a  certainty  of  in- 
dustrial effort  and  result  and  the  command  of  all  the  capital  need- 
ed for  any  useful  enterprise,  and  that  out  of  all  these  there  will 
not  come  an  increase  of  actual  wealth,  a  wider  distribution  of  it 
among  the  people  as  stockholders  in  the  great  corporations,  and 
a  decrease  of  the  cost  of  commodities  to  the  individual  man. 


EDWAED  W.  BEMIS. 

Bureau  of  Economic  Research. 

Prof.  Edward  W.  Bemis,  of  the  New  York  Bureau  of  Economic 
Eesearch,  was  the  next  speaker.  He  said  : 

Many  speakers  at  this  conference  have  sought  to  remove  all 
anxiety  as  to  the  future  of  the  problem  before  us,  by  referring  to 
the  scare  and  suffering  attendant  on  the  introduction  of  machin- 
ery and  of  the  corporation,  with  their  displacement  of  the  individ- 
ual hand  worker  and  of  the  small  partnership.  As  those  changes 
have  on  the  whole  worked  to  the  advantage  of  society,  though  in- 
troducing tremendous  and  still  unsolved  problems  of  the  distri- 
bution of  wealth  and  of  how  to  secure  continued  prosperity  and 
markets  for  farmer  and  manufacturer,  and  steady  employment  for 

394 


labor,  so  it  is  argued  we  should  smile  at  the  ignorant  fears  of  the 
fast  growing  number  of  those  that  are  truly  alarmed  over  the  won- 
derful growth  of  the  trust. 

Now  so  far  as  this  relates  to  the  department  store,  so  often 
classed  with  the  trust,  the  argument  is  sound.  The  department 
store  does  not,  like  so  many  trusts,  ruin  the  business  of  its  smaller 
rivals  by  cutting  prices,  even  below -cost,  in  one  portion  of  the 
community,  while  keeping  them  up  for  the  residents  of  other  sec- 
tions. It  furnishes  alike  to  all  the  advantages  of  lower-  prices, 
which  are  rendered  possible  by  the  economies  of  a  big  business, 
while  it  gives  its  patrons  opportunity  to  buy  all  their  goods,  from 
bonnets  to  flour,  from  needles  to  lawn  mowers,  in  one  store  at  a 
great  saving  of  time  and  cost  of  delivery.  It  permits  one  payment, 
one  delivery,  and  one, ringing  of  the  door  bell,  one  payment  and 
that  only  on  delivery  of  all  perishable  goods,  as  the  result  of  a 
day's  shopping,  and  bv  reason  of  its  rapid  sales  can  often  afford  to 
furnish  a  fresher  and  more  attractive  assortment  of  the  things  de- 
sired by  the  buyer. 

The  department  store,  however,  differs  from  the  trust  vitally 
in  the  fact  that  having  once  secured  a  large  market  by  reason  of  its 
accommodation  to  the  customer,  it  does  not,  like  the  trusts,  raise 
prices  above  those  that  would  naturally  exist  with  small  com- 
petitive stores.  The  essential  feature  of  the  trust,  however,  is  its 
monopoly  character.  While  legally  it  is  only  a  large  corporation, 
since  the  technical  trust  has  been  changed  to  the  corporate  form, 
yet  in  fact  there  is  all  the  difference  in  the  world  between  the 
change  from  hand  tools  to  machinery  or  from  the  partnership  to 
the  corporation,  or  from  the  small  store  to  the  department  store, 
throughout  all  of  which  the  keenest  competition  continues,  and 
the  change  from  the  group  of  competing  corporations  to  the  one 
giant  consolidation,  which  is  possessed  of  monopoly  features  by 
virtue  of  its  enormous  size  and  of  the  large  proportion  of  the  busi- 
ness of  the  countrv  in  its  hands  along  the  special  line  of  its  work. 
It  is  virtually  a  monopoly  of  large  capital,  or  a  capitalistic  monop- 
oly. Professor  Jenks«has  well  defined  it  as  such  a  monopoly  as 
"so  controls  the  business,  whatever  it  may  be,  as  practically  to 
regulate  competition  and  to  fix  the  price  of  its  products  on  the 
whole  with  little  reference  to  competitors,  or  to  the  cost  of  pro- 
duction, but  mainly  with  reference  to  securing  the  greatest  net 
results."  The  trust  differs  from  the  jo-called  natural  monopolies, 
which  I  prefer  to  call  monopolies  of  situation,  such  as  gas, 
street  railways,  water,  electric  light,  the  telephone,  the  telegraph 
and  railroad,  in  that  while  equally  natural  in  its  development, 
the  trust  does  not  primarily  depend  on  specially  favored  and 

395 


limited  locations  of  land,  but  on  the  enormous  amount  of  capital 
requisite  for  entering  upon  successful  competition.  It  is  not  de- 
nied that  the  trust  is  often  favored  by  affiliation  with  monopolies 
of  situation,  or  by  a  grip  upon  such  natural  resources  as  anthra- 
cite coal  mines  and  oil  wells,  but  in  a  broad  way  the  distinctions 
given  above  will  hold. 

I  cannot  subscribe  to  the  roseate  view  of  Mr.  Gunton  that 
wages  have  been  rapidly  rising  during  this  trust  movement. 
The  so-ealled.  Aldrich  or  United  States  Senate  financial  report 
of  1891,  upon  which  Mr.  Gunton  relies  for  his  statement  that 
wages  have  risen  in  a  certain  period  68  per  cent  or  thereabouts, 
lias  been  utterly  discredited  by  all  careful  students  who  have  ex- 
amined it.  Not  only  does  this  report  ignore  many  industries  in 
which  wages  have  fallen  and  base  its  conclusions  in  other  indus- 
tries upon  the  three  or  more  clerks  of  a  single  store  or  employees 
of  a  single  business,  but  throughout  it  follows  a  method  of  aver- 
aging which  can  be  best  illustrated  in  this  way :  Suppose  in  the 
course. of  ten  years  the  foreman  of  a  given  shop  has  had  his  pay 
increased  20  per  cent,  while  the  dozen  men  under  him  have  not 
gained  any  rise  in  wages.  This  Aldrich  report  argues  in  such  a 
case  that  the  average  increase  of  wages  in  that  enterprise  is  found 
by  adding  20  per  cent  rise  of  the  foreman  to  the  zero  rise  of  the 
men  and  dividing  by  two,  giving  thus  an  average  increase  of  wages 
of  10  per  cent.  Such  absolutely  dishonest,  or  certainly  deceptive 
methods  of  averaging  render  the  conclusions  on  wages  altogether 
valueless.  A  more  recent  report  in  a  United  States  Bulletin  of 
Labor  within  the  current  year  shows  that  in  a  large  number  of 
representative  occupations  in  our  leading  cities  there  has  been 
practically  no  rise  in  wages  during  the  past  twenty  years  and  an 
actual  fall  during  the  last  ten  years.  It  is  not  denied  that  in  the 
building  trades  and  a  few  others  where  labor  has  been  well  or- 
ganized the  rise  has  been  considerable. 

Without,  however,  attempting  to  connect  the  wage  movement 
thus  far  with  the  trust  question,  which  is  too  recent  in  its  develop- 
ment to  permit  of  conclusions,  it  will  be  noticed  that  the  present 
indictment  of  the  trust  takes  four  forms:  First,  either  a  direct 
rise  of  prices  on  the  formation  of  the  trust,  or  in  its  subsequent 
history,  as  apparently  in  the  case  of  the  Standard  Oil,  an  inter- 
ception of  many  of  the  benefits  of  invention  and  progress  in  the 
arts,  cheapening  of  transportation,  etc.,  which  would  normally 
have  had  great  tendency  to  reduce  the  •prices  cf  trust  goods  fur- 
ther than  the  trust  has  permitted,  as  has  been  so  fully  the  case 
in  the  competitive  market.  Mr.  Byron  W.  Holt,  who  appears  to 
have  made  the  most  careful  statistical  examination  of  trusts  thus 

396 


far  published,  for  example  in  the  June  Review  of  Reviews,  has 
informed  us  during  this  conference  that  of  four  hundred  trusts 
studied  by  him,  he  has  thus  far  only  found  two  that  have  failed  to 
raise  prices,  and  believes  there  are  but  very  few  others.  Those 
two  have  lowered  the  quality  of  their  product.  Following  in 
much  of  this  paper  the  article  which  I  contributed  July  20th,  to 
the  New  York  Journal  of  Commerce,  I  would  say  that  in  the  twelve 
years  prior  to  the  formation  of  the  Standard  Oil  trust  in  1882  the 
charge  for  transportation  of  oil  to  New  York  and  for  refining  it 
fell  from  17.16  cents  to  5.52  cents  per  gallon,  or  62  per  cent,  while 
the  fall  during  the  next  fifteen  years  from  1882  to  1897  was  only 
from  5.52  cents  to  4.04  cents,  or  27  per  cent,  and  nearly  all  of  this 
fall  was  due  to  cheaper  transportation  through  pipe  lines  which 
were  first  developed  by  rivals  of  the  great  oil  company.  During 
the  five  years,  1883  to  1887,  preceding  the  formation  of  the  Sugar 
trust,  the  average  difference  between  the  cost  of  raw  and  refined 
sugar  was  admitted  by  Mr.  Searles  before  the  Lexow  trust  com- 
mittee to  have  been  less  than  the  average  of  the  subsequent  nine 
j^ears  by  .128  cent,  i.  e.,  the  formation  of  the  trust  was  followed 
by  an  increased  charge  for  refining  of  one-eighth  cent  a  pound, 
or  $3,584,000  a  year  on  the  2,800,000,000  pounds  of  annual  out- 
put. The  public  was,  however,  blinded  to  this  by  the  greater  fall 
in  the  price  of  raw  sugar,  which  permitted  some  fall  in  the 
charge  for  refined  sugar,  despite  the  increased  toll  of  the  trust. 
Mr.  Searles  defended  the  increase  of  price  after  1887  by  the 
claim  that  the  previous  five  years'  business  had  been  conducted 
at  a  loss.  He  found  it  difficult,  however,  to  explain  in  this  view 
of  the  case  how,  on  the  formation  of  the  trust,  the  capitalization 
of  the  component  companies  was  swelled  from  $6,590,000  to  $42,- 
000,000,  or  over  six-fold.  The  fact  that  large  dividends  'have  been 
paid  on  such  an  enormous  amount  of  water  is  merely  another 
proof  of  the  extortionate  charges. 

Mr.  Henry  0.  Havemeyer,  president  of  the  American  Sugar 
Refining  Company,  testified  before  the  Lexow  trust  committee: 
"It  goes  without  saying  that  a  corporation  that  controls  80  per 
cent  of  the  product  does  control  the  market  price  up  to  the  im- 
porting point,  if  it  chooses  to  exercise  that  power."  The  ques- 
tion was  then  asked :  "You  do,  in  fact,  control  the  product  and 
price  in  the  United  States?"  To  which  Mr.  Havemeyer  replied: 
"We  undoubtedly  do." 

Even  better  proved  is  the  charge  against  the  trust  of  over- 
capitalization and  consequent  deception  of  investors  and  the 
public  as  to  the  amount  of  its  exorbitant  charges  and  as  to  its 
prospects  for  a  continuance  'of  these  profits.  IS'o  student  of  the 

397 


problem  doubts  the  evils  of  this  situation,  or  of  the  stimulation 
given  by  the  trust  to  a  dangerous  concentration  of  wealth  and 
purchasing  power  in  the  hands  of  the  few.  When  these  do  not 
care  to  buy  the  products  of  our  mills  and  the  many  can  not  do  so, 
frequent  depressions  and  a  feverish  demand  for  foreign  markets 
at  no  matter  what  cost  of  property  and  life  are  inevitable. 

Much  might  be  written  of  how  the  trust  often  clubs  competi- 
tors till  it  drives  them  from  the  field.  An  ordinary  competitive 
business  has  similar  tendencies,  it  may  be,  but  it  is  the  trust  which 
boldly  approaches  a  would-be  rival  and  declares  that  it  will  sell 
goods  below  cost  until  it  ruins  him  unless  he  will  join  the  great 
combine. 

Most  ominous  of  all  is  the  danger  in  the  trust  to  political  pur- 
ity and  personal  liberty.  Whether  we  like  it  or  not  we  are  be- 
ginning to  see  vigorous  efforts  of  our  law-making  bodies  to  regu- 
late city  monopolies  of  light,  heat  and  transportation.  The  latter 
effort  has  thus  far  had  its  most  visible  result  in  many  cities  in 
raising  the  price  of  the  alderman  and  the  legislator.  It  is  to  be 
feared  that  this  and  some  malodorous  events  in  the  United  States 
Senate  are  but  a  forecast  of  what  awaits  us  in  any  really  serious 
attempt  to  control  the  trust.  Yet  public  control  in  some  form  of 
trusts  is  the  mildest  demand  of  every  speaker  on  this  floor.  The 
support  of  the  trust  is  so  necessary  to  the  bar  and  the  press,  its 
donations  so  eagerly  desired  by  the  university,  the  library  and  the 
hospital,  that  freedom  of  speech  is  already  endangered. 

The  entire  manufacturing  capital  of  the  country  in  1890  was 
only  $6,500,000,000,  and  may  now  perhaps  be  $10,000,000,000, 
while  the  true  valuation  of  our  trusts  io-day  is  conservatively 
estimated  at  over  $2,000,000,000.  The  nominal  capitalization,  ac- 
cording to  Mr.  Holt,  in  the  June  Review  of  Reviews,  is  about 
$8,000,000,000.  If,  aside  from  all  their  water,  trusts  now  control 
one-fourth  or  even  one-sixth  of  the  manufacturing  capital  of  the 
country,  what  a  political  influence  they  must  be  able  to  exert 
over  their  employees.  Taken  in  connection  with  the  fast  con- 
solidating power  of  our  railroads  these  aggregations  of  capital 
probably  employ  to-day  one-fourth  cf  our  non-agricultural  voters. 

It  was  said  last  night  that  the  most  independent  class  of  men 
are  the  organized  laborers  in  well  paid  employments,  but  this 
ignores  the  well-known  fact  that  organized  labor  at  present  in 
America,  outside  of  the  glass  business,  is  almost  entirely  confined 
to  the  railroad  employments,  the  building  trades,  cigar  mak- 
ing and  printing,  though  there  are  a  few  other  well  organized 
trades.  The  vast  mass,  however,  of  the  machinery  industries,  such 
as  are  being  acquired  by  the  trust,  are  almost  entirely  unorganized, 

393 


and  are  likely  to  remain  so  for  some  time  to  come,  for  reasons 
which  I  cannot  stop  to  enumerate.  The  power  of  employers  to 
influence  the  political  action  of  their  unorganized  employees  is 
too  well  known  to  need  discussion. 

The  economies  of  the  trust,  however,  are  not  to  be  despised. 
Prof.  Henry  C.  Adams  and  some  large  manufacturers  here  present 
believe  that  the  possible  economies  from  this  form  of  organization 
are  mostly  confined  to  the  selling^  department,  but  they  admit  that 
here  the  chances  for  economy  are  great.  Some  of  the  largest  man- 
ufacturers in  their  respective  lines  in  the  United  States  are  au- 
thority for  the  assertion  that  the  price  that  the  consumer  pays  is 
often  100  per  cent  in  excess  of  the  cost  and  of  a  fair  profit  for  the 
manufacturer.  Through  a  saving  in  the  number  of  traveling 
salesmen,  in  advertising  and  in  the  distribution  of  goods  from 
the  nearest  source  of  supply,  and  in  many  other  ways,  this  cost  of 
distribution  might  well  be  reduced  one-half.  One  of  the  greatest 
criticisms  of  the  competitive  system  is  the  waste  involved,  for 
example,  in  the  journey  through  the  same  street  of  a  dozen  dif- 
ferent milk  carts  or  ice  wagons,  stopping  at  as  many  different 
houses.  The  manager  of  the  trust  adopting  unconsciously  this 
socialist  view  of  the  matter,  familiarizes  us  with  the  arguments 
as  to  the  advantages  of  combination.  We  are  then  face  to  face 
with  our  problem,  given  on  the  one  hand  a  new  form  of  organiza- 
tion, which  has  in  it  vast  possibilities  of  social  economy  and  ad- 
vantage, but  on  the  other  hand  is  now  being  selfishly  used  to  work 
great  social  harm. 

What  shall  we  do  about  the  trusts? 

First — We  may  leave  the  entire  matter  alone  in  the  belief 
that  many  of  these  trusts  will  soon  go  to  pieces.  The  revival  of 
the  copper  syndicate  in  stronger  form  than  ever,  despite  the  fail- 
ure of  the  previous  one,  and  the  history  of  many  other  such  ex- 
periences show  that  while  many  trusts  will  doubtless  go  to  the 
wall  from  time  to  time,  the  trust  movement  is  likely  to  become 
stronger  and  stronger  if  left  undisturbed. 

Second — We  may  favor  the  solution  which  is  attracting  some 
attention  in  England,  where,  if  I  understand  the  matter  aright, 
the  trust  of  capital  allies  itself  with  a  strong  labor  combination, 
and  the  two  together  agree  to  rob  the  consumer  of  all  they  can, 
the  monopoly  profits  to  be  divided  in  the  proportion  of  two  or 
more  parts  to  capital  to  one  part  for  labor.  This  is  the  meaning  of 
the  contention  of  Mr.  E.  J.  Smith,  of  Birmingham,  that  when  a 
combination  of  capital  raises  prices  10  per  cent,  it  should  raise 
wages,  which  are  but  one  factor  in  cost,  only  5  to  10  per  cent.  That 
such  a  solution,  if  really  being  tried  across  the  water,  will  ever 

399 


satisfy  our  people  for  any  length  of  time  is  incredible,  although 
it  may  be  an  improvement  over  the  American  method  of  denying 
the  right  of  labor  to  form  its  own  organization  and  deal  as  a  unit 
with  the  trust. 

Third — -"We  may  smash  the  trust,  or  endeavor  so  to  do.  The 
trouble  with  this  is  two-fold — it  cuts  us  off  from  any  possibility 
of  securing  the  advantages  which  under  a  better  social  organiza- 
tion the  general  public  might  derive  from  the  trust,  and  in  the 
second  place  it  seems  to  fly  in  the  face  of  industrial  evolution. 
There  is  more  and  more  evidence  that  Henry  D.  Lloyd  is  right 
when  he  says  that  "monopoly  is  business  at  the  end  of  its  jour- 
ney." The  world  is  face  to  face  with  a  new  type  of  competition, 
because  the  development  of  machinery  has  required  a  large 
amount  of  capital  and  its  extreme  specialization.  Since  it  is  no 
longer  possible  to  regulate  competition  by  the  easy  withdrawal 
of  unprofitable  capital  to  other  employments,  competition  is 
changing  to  a  struggle  to  the  death.  The  public  appreciates  the 
change  by  designating  it  as  "cut-throat"  competition,  or  a  "war" 
of  rates.  In  an  industry  where  all  goods  are  of  the  same  kind  and 
quality  and  not  known  by  the  brand  of  the  maker,  and  where 
the  capital  required  is  very  large,  there  is  a  tendency  for  com- 
petition to  become  so  keen  as  to  allow  no  margin  for  interest 
on  the  necessary  capital.  Particularly  is  this  true  where  the 
competitors  have  the  corporate  form,  and  the  managers  who  set 
the  prices  do  not  feel  that  it  is  interest  on  their  own  capital  that 
they  are  imperiling.  Suppose  that  a  given  quantity  of  sugar  or 
oil  or  matches  is  sold  for  a  dollar,  and  that  75  cents  would  cover 
labor,  raw  material  and  other  operating  expenses,  and  that  25 
cents  would  be  a  fair  allowance  for  return  on  capital,  due  allow- 
ance being  made  in  this  25  cents  for  depreciation,  etc.  Under 
these  circumstances  it  is  quite  natural  for  some  factory  to  try 
to  secure  business  from  its  rivals  and  obtain  command  of  the 
market  by  cutting  the  price  to,  say,  90  cents.  Eival  establish- 
ments will  rightly  argue  that  if  they  also  sell  for  80  cents,  they 
will  lose  10  cents  on.  every  article  that  they  sell,  but  if  they  do 
not  reduce  and  so  lose  their  trade,  they  will  lose  25  cents  on 
every  article  they  do  not  sell,  since  their  fixed  charges  con- 
tinue when  business  stops.  Consequently  one  cut  in  prices  fol- 
lows another,  with  general  resulting  demoralization,  and  injury 
to  the  public,  for  it  increases  the  hazards  of  business,  and  this 
renders  higher  prices  necessary  in  the  end,  in  order  to  tempt 
capital  into  business,  while  opportunities  for  securing  investment 
'  for  idle  capital  are  lessened.  Where,  however,  the  capital  neces- 
sary to  start  a  factory  is  small,  competition  will  not  long  reduce 

400 


prices  unduly,  without  such  a  quiet  lessening  of  capital  in  the 
business  as  will  bring  back  the  prices  of  products  to  their  normal 
level.  Where  the  capital  required  is  enormous,  it  cannot  be  so 
easily  transferred. 

Where  an  industry  requires  special  skill  and  its  goods  have 
made  famous  the  brand  of  the  maker,  as  in  the  case  of  the  Elgin 
watch  and  the  Columbia  bicycle,  there  is  less  need  of  union  with 
other  establishments,  although  even  here  combination  is  begin- 
ning to  enter.  It  has  been  easy  at  times  to  consolidate  the  alcohol 
manufacturers  or  makers  of  proof  spirits,  but  it  has  been  more 
difficult  to  form  a  trust  among  the  whisky  manufacturers  of 
Kentucky,  whose  individual  brands  are  famous.  If  the  trusts 
would  confine  themselves  to  restoring  prices  when  unduly  low 
to  the  level  which  would  leave  merely  reasonable  profits,  such 
as  the  same  investment,  risk  and  ability  would  secure  in  com- 
petitive business,  and  if  the  other  abuses  above  mentioned  could 
be  eliminated,  the  trust  must  be  looked  upon  with  comparative 
favor.  But  the  tendency  of  any  monopoly  in  private  hands  to 
abuse  its  position  is  beyond  question,  and  the  difficulties  before 
us  are  enormous. 

In  some  respects  the  trade  union  resembles  the  trust,  since 
it  seeks  to  secure  a  monopoly  of  the  labor  market,  and  in  order 
to  secure  it  adopts  many  trust  methods,  such  as  refusal  to  deal 
with  rivals  who  will  not  join  it.  The  labor  world,  like  the  cap- 
italist world,  is  divided  into  two  divisions — those  who  sell  their 
products  by  reason  of  special  superiority,  or  well  established  quali- 
ties of  the  seller,  as  for  example,  the  teacher,  lawyer,  physician, 
artist,  and,  on  the  other  hand,  the  great  mass  of  workmen,  even 
in  the  so-called  skilled  trades.  In  the  latter,  one  workman  is 
usually  considered  about  as  good  as  another,  and  the^ question  of 
wages  is  the  chief  factor  with  the  employer.  The  men  thus  are 
tempted  to  cut  under  each  other  in  an  effort  to  secure  employ- 
ment, until  wages  fall  below  such  a  point  as  will  properly  keep  up 
the  standard  of  living  and  provide  for  their  children  and  for  old 
age.  The  labor  trust  is  as  inevitable  as  the  trust  of  large  capital, 
but  the  former,  unlike  the  latter,  gives  equal  vote  to  all  its  mem- 
bers, independent  of  their  capital;  it  admits  every  good  work- 
man on  equal  terms  with  the  organizers  of  the  union,  and  is  an 
engine,  not  of  the  well-to-do  and  the  wealthy,  but  of  the  weak 
against  the  strong.  The  many  points  of  similarity,  however, 
between  trades  unions  and  trusts  render  it  very  difficult  to  pass 
laws  preventing  the  latter  that  shall  not  at  the  same  time  be 
interpreted  by  the  courts  as  preventing  the  former. 

Fourth — A  more  hopeful  attack  upon  the  abuses  of  the  trust 

401 


consists  in  the  removal  of  tariffs  upon  such  products  as  Congress 
shall  decide  to  be  of  trust  make.  It  will  not  do  to  leave  to  the 
courts  the  determination  of  what  are  trusts.  Congress  must  make 
its  own  decision  of  what  tariffs  to  repeal.  This  has  been  suf- 
ficiently discussed  already  to  render  further  consideration  unnec- 
essary at  present. 

Fifth — The  notorious  and  widespread  granting  of  secret  re- 
bates and  other  privileges  by  railroads  to  large  shippers  and  par- 
ticularly to  trusts  and  combinations  must  be  checked  in  the  most 
summary  and  speedy  manner,  although  we  are  probably  forced 
by  the  conditions  of  public  opinion  to  approach  the  subject 
through  public  regulation,  rather  than  through  ownership  by  the 
people,  which  I  believe  will  be  found  in  the  end  the  only  satis- 
factory solution,  as  has  been  the  case  recently  in  Switzerland. 
The  railroads  cannot  very  well  be  controlled  by  commissions,  for 
these  giant  corporations  regulate  their  regulators — they  insidi- 
ously weaken  or  control  the  bodies  appointed  to  control  them. 
The  independent  shipper,  the  average  business  man,  is  likely  ere 
long  to  recognize  that  the  door  to-  the  trust  problem  lies  in  a 
solution  of  the  railroad  question.  The  Interstate  Commerce 
Commission  in  its  last  report  declares:  "There  is  probably  no 
one  thing  to-day  which  does  so  much  to  force  out  the  small 
operator  and  to  build  up  these  trusts  and  monopolies,  against 
which  law  and  public  opinion  alike  beat  in  vain,  as  discrimination 
in. freight  rates.  This  problem  is  so  serious  that  it  will  soon 
attract  an  attention  that  has  never  hitherto  been  given  to  it." 

Sixth — The  conference  has  been  several  times  invited  to  con- 
sider direct  public  regulation  of  the  trust.  This  will  require  in 
a  large  measure  preliminary  constitutional  changes,  so  as  to  give 
more  opportunity  than  we  now  have  for  national  regulation  of 
industries  that  through  their  wide  area  of  operations  are  su- 
perior to  state  control.  Prof.  Jenks  has  urged  for  the  protection 
of  the  investor  that  we  should  require  sworn  returns  to  the  stock 
exchange,  when  stocks  and  bonds  of  great  combinations  are 
listed  there.  This  report  should  relate  to  value  of  physical  plants, 
cost  of  operation,  etc.  Prof.  Henry  C.  Adams  goes  farther,  and 
urges  government  reports  on  all  the  details  of  business  of  these 
trusts  and  the  fullest  publicity  with  regard  to  their  accounts  and 
conduct,  while  the  attorney-general  of  Maryland  last  night  even 
went  so  far  as  to  urge  public  control  of  wages,  hours  of  labor,  and 
the  prices  of  goods.  This  all  sounds  very  good  theoretically,  and 
it  is  quite  likely  that  we  should  work  in  this  direction,  for  a  while, 
but  in  practice  it  will  be  found  that,  as  the  Massachusetts  Railroad 
Commission  once  declared,  the  placing  of  ownership  in  private 

402 


hands  and  management  in  public  hands,  is  sure  to  result  in  great 
political  demoralization.  We  shall  have  to  devote  the  most  stren- 
uous efforts  to  purifying  and  strengthening  government,  if  it  is  to 
undertake  this  vast  task. 

Seventh — Prof.  Adams  has  urged  that  we  restrict  the  right  of 
incorporation  in  the  case  of  all  industries  wtyich  are  not,  like 
railroads,  of  quasi  public  character.  Further  explanation  by 
Prof.  Adams  may  win  us  over  to  endorsement  of  this  proposition, 
but  at  present  it  looks  like  taking  a  backward  step,  and  depriving 
society  of  the  almost  universally  recognized,  but  perhaps  exag- 
gerated benefits  of  the  corporate  form  of  organization. 

Eighth — There  is  an  increased  number,  though  still  but  a 
minority  of  very  intelligent  people  who  believe  that  the  only  way 
ultimately  of  treating  the- trust  in  an  adequate  manner  fe  for  all 
of  us  to  join  it,  by  public  ownership  and  operation  of  oil  refin- 
eries, match  factories,  anthracite  coal  fields,  etc.,  just  as  in  a 
somewhat  indirect  manner  the  people  own  many  sugar  refineries 
in  the  great  province  of  Queensland,  Australia.  While  the  writer 
finds  himself  in  growing  sympathy  with  such  a  solution,  it  seems 
still  only  a  remote  possibility.  The  people  must  first  become 
habituated  to  public  operation  on  a  civil  service  reform  basis  of 
city  monopolies,  the  railroads,  telegraph  and  express  business 
before  they  can  ever  wisely  undertake  forms  of  business  now 
absorbed  by  the  trusts. 

Ninth — Finally,  there  is  no  quick  and  royal  road  to  the  set- 
tlement of  the  trust  question.  Even  Henry  D.  Lloyd,  whose 
book  on  this  question  is  known  the  countrv  over,  when  asked 
by  a  recent  congressional  committee  for  a  bill  dealing  with  the 
trust  problem,  replied  that  he  had  no  legislation  as  yet  to  pro- 
pose, although  he  would  suggest  that  a  good  introduction  to  more 
constructive  legislation  could  be  made  by  opening  our  prison  doors 
as  readily  to  receive  the  rich  as  the  poor  criminal,  and  by  punish- 
ing the  corporate  violators  of  the  laws  we  now  have. 

We  conquered  at  Santiago  and  Manila  by  building  our  Ore- 
gons  on  a  far-off  Pacific  coast,  and  training  our  Deweys  in  rocky 
Vermont,  which  does  not  even  touch. the  sea;  so  before  we  can 
wisely  deal  directly,  or  at  least  adequately,  with  the  trust  problem, 
we  will  have  to  build  our  battering  ram  back  in  the  hills,  and  grad- 
ually move  it  ur>  to  the  walls  of  Jericho,  getting  practice  and  pre- 
paring for  the  final  struggle  by  overthrowing  many  obstructions 
as  we  move  along.  There  must  be  such  a  change  in  our  attitude 
that  we  will  not  merely  envy  the  trust,  because  we  are  not  for- 
tunate enough  to  be  in  one,  and  the  time  must  come  when  it 
will  no  longer  be  possible  for  our  state  universities  to  receive  a 

403 


paltry  three  or  five  thousand  dollars  a  year  for  the  investigation 
and  teaching  of  all  these  great  economic  and  social  questions, 
as  is  the  case  in  most  of  our  states  to-day  where  monopoly  mag- 
nates think  nothing  of  securing:  to  their  universities  ten  times 
as  much  a  year  for  the  same  purpose.  Our  American  states  will 
have  to  cease  to  he  contented  with  commissioners,  state  attor- 
neys, etc.,  worth  two  or  three  thousand  dollars  a  year,  and  going 
out  of  office  with  every  change  of  administration,  while  a  sugar 
refinery  or  a  railroad  is  ready  to  pay  five  to  ten  times  that  amount 
for  its  talent  wherewith  to  oppose  or  checkmate  public  control. 
The  trust  problem,  like  the  slavery  question,  will  take  a  genera- 
tion or  more  to  settle,  and  like  the  slavery  question  will  entail 
endless  trouble  unless  approached  intelligently  and  with  deep 
conscientious  devotion  to  the  public  weal. 


JOHN  BATES  CLARK. 

Columbia  University. 

The  session  closed  with  an  address  on  "The  Necessity  of  Sup- 
pressing Monopolies  While  Retaining  Trusts,"  by  Prof.  John  B. 
Clark,  of  New  York,  who  said : 

I  shall  confine  myself  to  a  single  one  of  the  questions  asked  by 
Professor  Jenks  in  his  admirable  introductory  paper,  the  one, 
namely,  that  referred  to  the  relation  of  trusts  to  competition. 
1  accept  and  use  the  loose  definition  of  the  term  trust  that  is  cur- 
rent in  popular  thought  and  speech.  It  is  any  corporation  that 
is  big  enough  to  be  menacing.  There  is,  indeed,  an  intermediate 
form  of  the  trust  which  allows  the  companies  or  firms  that  com- 
pose it  to  retain  a  separate  existence,  though  they  form  a  com- 
bination, or  pool,  for  the  purpose  of  limiting  production  arid  rais- 
ing prices.  Such  forms  of  the  trust  can  probably  be  crushed  by 
law;  but  the  result  of  this  will  be  to  cause  many  of  them  to-take 
the  shape  of  monster  corporations ;  and  it  is  in  this  form  that  you 
will  finally  have  them  to  deal  with. 

I  claim  the  immunities  of  a  theoretical  student  when  I  enter 
the  realm  of  prophecy,  and,  on  the  basis  of  laws  and  tendencies 
that  are  plainly  discernible,  make  a  somewhat  confident  asser- 
tion concerning  the  type  of  trust  legislation  that  is  likely  to  be 
permanent.  Very  unlike  the  sweeping  prohibitions  with  which 
the  statute  books  of  many  states  have  been  supplied,  is  the  law 
that  will  survive  and  will  accomplish  what  we  all  have  in  view, 
the  protection  of  the  public  from  the  extortions  of  monopolies. 

404 


It  will  do  in  reality  what  the  ordinary  anti-trust  law  fails  to  do, 
for  it  will  have  on  its  side  what  the  ordinary  statute  has  against 
it.  namely,  the  power  of  economic  law. 

Three  distinct  things  are  often  confounded  and  indiscrimi- 
nately attacked:  The  first  is  capital  as  such;  the  second  is  cen- 
tralization, and  the  third  is  true  monopoly.  Popular  attacks  on 
monopoly  often  take  the  shape  of  attacks  on  capital  itself.  I  am 
happy  to  say  that  this  has  not  happened  in  the  present  confer- 
ence, for  we  have  heard  again  and  again,  in  the  utterance  of 
speakers  who  have  opposed  trusts,  expressions  that  show  that  they 
are  not  assailing  capital.  They  are  assailing  aggregations  of 
capital.  They  oppose  centralization  because  of  the  element  of 
monopoly  that  at  present  inheres  in  it.  Poor  as  is  the  opinion 
that  I  entertain  of  many  existing  anti-trust  laws,  I  must,  in  fair- 
ness, say  that  they  also  strike  not  at  capital  itself,  but  at  the  cen- 
tralized form  of  it.  The  present  effort  of  the  people  is  to  stop 
centralization  in  order  to  preclude  monopoly,  while  their  effort 
will  ultimately  be  to  crush  the  element  of  monopoly  out  of 
massed  capital  and  let  massing  continue.  The  line  of  cleavage 
between  what  is  good  and  will  abide,  and  what  is  harmful  and 
must  go,  is  not  between  capital  and  centralization,  but  between 
centralization  and  monopoly. 

If  it  were  impossible  to  have  capital  in  great  masses  without 
having  true  monopolies,  I  would  favor  a  heroic  effort  to  stem  the 
current  of  natural  progress  and  keep  the  general  capital  of  each 
branch  of  business  in  the  shape  of  separate  smaller  and  compet- 
ing capitals.  Monopoly  is  evil,  and  almost  wholly  so;  and  if  the 
massing  of  productive  wealth  necessarily  means  monopoly,  fare- 
well to  centralization.  We  shall  do  our  best  to  get  rid  of  it,  and 
shall  suffer  the  loss  of  productive  power  that  this  entails,  as  the 
price  that  we  are  willing  to  pay  for  being  rid  of  a  great  evil.  The 
fact  is  that  massed  capital  does  not  need  to  bring  with  it  a  regime 
of  true  monopoly.  We  shall  soon  see  why  this  is  true,  and  before 
doing  so  it  is  well  worth  while  to  notice  how  much  will  be  gained 
if  we  can  safely  allow  the  natural  and  centralizing  tendency  to  go 
on.  It  means  the  survival  of  the  most  -productive  forms  of  busi- 
ness. It  is  first  and  chiefly  because  it  can  give  more  for  a  dollar 
than  little  establishments  can  give  that  the  great  establishments 
supplant  them.  They  out-do  the  small  ones  in  serving  the  pub- 
lic, and  this  power  of  superior  service  is  soon  to  have  a  new  and 
unique  field  in  which  to  display  itself.  We  are  entering  on  an 
era  of  world-wide  industrial  connection.  Asia  and  Africa  are 
incorporating  themselves  into  the  economic  organism  of  which 
Europe  and  America  are  the  center.  There  is  coming  a  neck-and- 

405 


Heck  contest  between  European  countries  and  the  United  States 
for  lucrative  connections  with  the  outlying  regions.  There  is 
also  coming  a  later  and  grander  contest  between  both  America  and 
Europe,  on  the  one  hand,  and  Asia  and  Africa  on  the  other,  for 
the  command  of  the  traffic  of  the  world.  In  this  contest  victory 
involves  more  than  any  hurried  expressions  of  mine  can  indicate. 
It  means  a  leading  position  in  the  permanent  progress  of  the 
world.  It  means  positive  wealth,  high  wages,  and  intellectual 
gains  that  cannot  be  enjoyed  by  those  who  develop  less  power. 

In  the  momentous  struggle  that  is  before  us  and  that  will 
yield  to  the  successful  the  greatest  of  mundane  prizes,  I  want  my 
country  to  come  uppermost.  To  that  end  I  wish  it  to  have  every 
advantage  that  it  can  have  in  the  way  of  productive  power.  I 
wish  it  to  be  able  to  meet  the  fiercest  competition,  not  by  accept- 
ing low  pay  for  its  labor,  but  by  creating  the  largest  possible 
product.  Do  you  suppose  that  this  is  possible  if  it  reverts  to  the 
plan  of  multiplying  little  shops,  with  the  wastes  that  this  system 
entails?  Mechanical  invention,  on  the  one  hand,  and  organiza- 
tion, on  the  other,  can  save  us  in  the  sharpest  economic  contests. 

There  is  a  competing  power  that  comes  from  poverty.  Pauper 
labor  is  a  dangerous  antagonist.  We  have  perceived  this  at  times, 
in  the  rivalries  of  America  and  Europe,  and  shall  see  it  more 
plainly  when  the  poorly  paid  dwellers  in  Asia  shall  enter  the 
manufacturing  field  and  try  conclusions  with  us  in  an  effort  to 
command  the  largest  markets.  If  they  under-bid  us  it  will  be 
because  they  take  less  than  we  do  for  their  labor;  while  if  we 
under-bid  them  it  will  be  because  we  produce  more  by  our  labor. 
Against  the  competing  power  that  rests  on  poverty  is  to  be 
arrayed  the  competing  power  that  rests  on  economic  strength, 
and  this  strength  can  come,  in  a  decisive  measure,  only  to  that 
country  that  combines  with  inventive  genius  an  organizing 
genius,  and  so  adds  to  the  power  of  the  engine,  the  dynamos  and 
the  automatic  machine,  the  power  of  centralized  capital.  I  wish 
that  successful  country  to  be  ours.  I  wish  that  our  workmen 
may  excel  not  in  power  to  live  on  a  little,  but  in  power  to  create 
much,  and  to  offer  what  they  create  for  a  correspondingly  large 
reward. 

Is  this  possible  under  a  regime  of  great  combinations?  I 
firmly  believe  that  it  is  so ;  though  it  will  not  be  possible  without 
the  wisest  laws,  honestly  enforced,  and  backed  by  all  the  moral 
energy  that  the  present  anti-trust  campaign  is  developing. 

Why  is  it  that  trusts  have  not  raised  the  prices  of  their  prod- 
ucts to  an  undeniable  and  startling  extent?  Why  has  it,  until 
lately,  been  almost  a  debatable  question  whether  they  raise  them 

406 


at  all?  Are  their  managers  filled  with  an  enthusiasm  of  human- 
ity and  a  desire  to  scatter  gifts  among  the  people?  Have  they 
conscientious  scruples  against  making  undue  profits?  They  do 
not  raise  prices  very  much  because  they  cannot.  Why  they  can- 
not do  it  the  public  does  not  altogether  understand. 

In  the  lucid  intervals  in  which  they  tellthe  truth  to  the  peo- 
ple, managers  of  trusts  say  that  they  cannot  greatly  raise  prices 
without  bringing  new  competitors  into  the  field.  As  has  been 
said,  the  foundation  of  a  combination  is  liable  to  "build  mills," 
and  so  to  defeat  the  purpose  for  which  the  combination  is  formed. 
To  keep  the  new  mills  from  coming  into  existence  a  wise  policy 
keeps  prices  at  a  moderate  level.  Within  limits  it  is  safe  to  raise 
them,  but  beyond  such  limits  it  is  not  safe.  The  competitor  who 
is  not  now  in  the  field,  but  who  will  enter  it  at  once  if  prices  are 
unduly  raised,  is  the  protector  of  the  purchasing  public  against 
extortion.  He  is  also  the  protector  of  the  workmen,  for  the  fact 
that  he  will  begin  his  operations  if  too  many  of  the  old  mills  are 
closed,  prevents  the  closing  of  them.  In  technical  phrase  it  is 
potential  competition  that  is  the  power  that  holds  trusts  in 
check.  The  competition  that  is  now  latent,  but  is  ready  to  spring 
into  activity  if  very  high  prices  are  exacted,  is  even  now  efficient 
in  preventing  high  prices.  It  is  to  be  the  permanent  policy  of 
wise  and  successful  peoples  to  utilize  this  natural  economic  force 
for  all  that  it  is  worth. 

At  present  it  is  not  an  adequate  regulator.  The  potential 
competitor  encounters  unnecessary  obstacles  when  he  tries  to  be- 
come an  active  competitor.  There  are  abnormal  difficulties  and 
dangers  in  his  way,  and  the  consequence  of  this  is  that  he  is  often 
reluctant  and  tardy  in  his  action ;  and  the  fear  of  him  is  a  far  less 
potent  influence  with  the  managers  of  trusts  than  it  easily  might 
be  made  to  be. 

The  European  competitor  is  usually  a  potential  competitor 
because  of  the  tariff  which  deters  him  from  becoming  an  actual 
one.  Shall  we  sweep  away  all  duties  on  trust-made  articles? 
That  would  make  this  latent  competition  active,  and  would  do 
much  to  keep  trusts  in  check.  As  a  theoretical  economist  I  am 
not  prepared  to  favor  so  sweeping  a  measure ;  but  where  there  are 
duties  that  are  not  at  all  necessary  for  the  protection  of  an  indus- 
try as  such,  but  are  necessary  for  the  protection  of  a  trust  in  an 
industry,  these  particular  duties  should  go. 

A  domestic  competitor  is  sometimes  only  a  potential  one  be- 
cause of  patents.  A  trust  often  sustains  itself  by  securing  a 
monopoly  of  the  kinds  of  machinery  that  are  needed  in  an  indus- 
try. Shall  we  abolish  patents?  Far  from  it ;  but  we  should  re- 

407 


form  our  patent  laws,  and  while  making  them  afford  a  greater 
incentive  than  they  now  do  to  invention,  should  prevent  patents 
from  being  instruments  of  extortion  or  oppression. 

Railroads  have  the  power  to  handicap  the  potential  competi- 
tor, and  it  is  an  open  secret  that  they  are  doing  it.  Discriminat- 
ing rates  for  carrying  freight  are  an  intolerable  evil,  and  they 
tend  distinctly  to  build  up  real  monopolies.  If  legal  acuteness 
backed  by  popular  energy  can  secure  it,  this  evil  must  be  sup- 
pressed. 

These  measures  have  already  received  attention  in  popular 
discussions  and  in  the  discussions  of  this  conference.  There  is 
another  type  of  law  that,  as  I  venture  to  affirm,  is  of  even  greater 
consequence  than  any  that  is  before  the  public.  The  ability  to 
make  discriminating  prices  puts  a  terrible  power  into  the  hands  of 
a  trust.  If  in  my  small  field  it  can  sell  goods  at  prices  that  are 
below  the  cost  of  making  them,  while  it  sustains  itself  by  charg- 
ing high  prices  in  a  score  of  other  fields,  it  can  crush  me  without 
itself  sustaining  any  injury.  If,  on  the  other  hand,  it  were 
obliged,  in  order  to  attack  me,  to  lower  the  prices  of  all  its  goods, 
wherever  they  might  be  sold,  it  would  be  in  danger  of  ruining 
itself  in  the  pursuit  of  its  hostile  object.  Its  losses  would  be 
proportionate  to  the  magnitude  of  its  operations.  Many  a  small 
competitor  is  in  a  position  to  beat  a  trust  in  a  contest  of  cut- 
throat competition,  if  only  the  trust  were  compelled  to  make  its 
low  prices  uniform  for  all  customers.  There  is  no  saving  power 
in  a  great  capital,  if  a  ruinous  competition  eritails  losses  that  are 
proportionate  to  the  capital. 

Akin  to  the  power  to  make  prices  low  in  one  locality  and  high 
in  many  others  is  the  power  to  reduce  the  prices  of  one  grade  or 
variety  of  goods,  and  to  sustain  them  on  other  varieties.  My 
mill  may  make  only  one  specialized  product,  and  the  mills  of  the 
trust  may  make  that  kind  of  goods  and  twenty  others.  If  it  i? 
willing  to  lose  money  for  a  time  on  the  goods  that  I  produce,  and 
to  make  money  on  all  other  kinds,  it  can  ruin  me  if  it  will. 

Akin  to  these  resources  for  predatory  warfare  is  the  power  to 
boycott  customers  who  will  not  give  their  whole  patronage  to 
the  trust,  or  to  make  special  rebates  to  those  wholesale  or  retail 
merchants  who  will  refuse  to  buy  any  goods  from  independent 
producers.  Such  producers  may  find  most  markets  closed  against 
their  goods,  however  cheap  and  excellent  they  may  be. 

The  power  to  do  all  these  things  gives  to  the  trust  a  great  and 
abnormal  advantage  which  the  law  can  take  away. 

Predatory  competition  that  is  evil  and  that  crushes  producers 
who  have  a  right  to  survive  rests  mainly  in  one  of  these  three 


408 


methods  of  discriminating  and  unfair  treatment  of  customers. 
That  power  must  be  destroyed.  With  a  fair  field  and  no  favor 
the  independent  producer  is  the  protector  of  the  public  and  of 
the  wage-earner;  but  with  an  unfair  field  and  much  favor  he  is 
the  first  and  most  unfortunate  victim.  Save  him,  and  you  save 
the  great  interests  of  the  public.  You  can  do  this  if  you  find  or 
make  a  way  to  success  in  that  type  of  legislation  that  will  prevent 
the  single  evil,  discrimination  in  the  treatment  of  customers. 
Put  them  all  under  what  in  diplomacy  would  be  called  a  "most 
favored  nation  clause";  secure  to  all  of  them  the  benefit  of  the 
best  treatment  that  the  trust  gives  to  any  of  its  customers,  and 
you  may  forego  all  other  attempts  to  regulate  their  charges. 
Economic  law  that  acts  even  now  in  a  way  that  limits  their  exac- 
tions, will  act  far  more  efficiently.  It  will  keep  prices  and  wages 
at  or  near  their  natural  levels  and  that,  too,  without  sacrificing 
the  prosperity  that  a  high  organization  of  industry  insures. 
Carry  that  policy  to  success — conquer  the  difficulties  that  lie  in 
the  way  of  it — and  you  will  secure  for  our  country  a  happy  union 
of  productive  power,  that  will  give  us  the  command  of  the  mar- 
kets of  the  world,  and  justice,  that  will  develop  the  manhood  and 
insure  the  contentment  of  our  citizens. 


A.  E.  EOGEKS. 

University  of  Maine. 

In  the  preparation  of  this  paper  which  I  now  have  the  honor 
to  present  to  this  convention,  it  has  seemed  to  me  unnecessary 
to  discuss  at  any  length  the  results  of  the  present  tendency  in 
the  industrial  and  commercial  world  towards  concentration  of 
power  and  control. 

It  must  be  admitted  at  the  outset  that  competition  is  not 
always  an  unalloyed  blessing,  that  there  are  cases,  especially  in 
the  great  business  of  railroad  transportation,  where  the  advan- 
tage to  certain  individuals  resulting  from  the  struggle  for  patron- 
age is  more  than  offset  by  the  disadvantage  to  the  people  as  a 
whole  consequent  upon  the  demoralization  of  a  service  that  is 
essentially  public  in  its  nature.  But  that  the  great  combinations 
ordinarily  termed  "trusts"  are  an  evil  in  our  social  and  economic 
life  is  admitted  by  the  great  majority  of  those  who  are  not  the 
beneficiaries  of  them,  and  who  are  not  the  advocates  of  state  so- 
cialism. The  latter  see  in  these  organizations  but  the  prelude 
of  the  destruction  of  competition  of  every  kind  through  the  pub- 
lic ownership  and  control  of  all  means  of  production. 

409 


Indeed,  there  is  no  argument  in  favor  of  these  combinations, 
organized  to  crush  competition,  to  limit  production,  and  to  con- 
trol prices,  which  cannot  logically  and  consistently  be  turned  by 
the  socialist  to  support  his  doctrines.  If  avoidance  of  waste 
resulting  from  competition  is  to  outweigh  any  and  all  consid- 
erations of  individual  initiative  and  enterprise,  and  is  to  be  a 
determining  factor  in  our  social  and  economic  life,  then,  the  more 
perfectly  our  people  are  organized  as  a  great  industrial  machine, 
the  more  completely  shall  we  realize  our  ideal.  If  this  is  to  be 
the  condition,  however,  the  socialist  is  right  in  his  contention, 
for  it  will  be  safer  and  better  to  entrust  the  control  of  this  ma- 
chine to  the  government,  which  is  responsible  to  the  people,  than 
to  place  it  in  the  hands  of  irresponsible  combinations,  where,  as 
both  history  and  recent  experience  demonstrate,  it  will  not  only 
be  susceptible,  but  liable,  to  grievous  abuse. 

In  the  social  and  industrial  world,  a  great  and  growing  evil 
is  to  be  checked  and  destroyed  only  by  striking  at  the  very  roots 
of  it.  Spasmodic  legislation,  however  drastic,  will  generally 
prove  not  only  useless,  but  harmful.  In  the  majority  of  cases, 
such  legislation  will  be  circumvented  by  skillful  lawyers  em- 
ployed for  this  purpose  by  interested  parties  and  when,  as  often 
happens,  some  of  its  provisions  in  their  application  conflict  with 
fundamental  principles  of  our  jurisprudence  that  have  been  made 
a  part  of  our  national  or  state  constitution,  the  very  evil  that  the 
legislation  was  intended  to  check  tends  from  this  fact  to  assume 
a  legitimate  character  to  which  it  has  no  claim.  Even  in  those 
cases  where  legislation  of  this  nature  effects  the  purpose  of  its 
framers  and  reaches  the  abuses  at  which  it  is  aimed,  it  is  apt, 
from  its  radical  nature,  to  involve  such  an  excess  of  inconvenience 
and  harm  as  to  lead  to  its  early  repeal,  and  thus  to  create  in  the 
minds  of  many  the  dangerous  feeling  that  such  evils  are  irreme- 
diable under  present  social  conditions. 

Trusts,  as  they  are  commonly  called,  whether  in  the  form  of 
trusts  proper,  or  of  great  corporations,  as  well  as  corporations 
organized  for  the  purpose  of  fraud  and  swindling,  are  but  the 
natural  results  of  the  vices  and  deficiencies  in  our  corporation 
laws,  and  it  is  here  that  the  remedy  must  be  applied,  if  this  dis- 
ease in  our  social  and  political  organism  is  to  be  treated  ration- 
ally. 

Investigation  of  many  economic  questions,  such  as  rate  of 
wages,  interest,  profits,  labor-saving  machinery,  division  and  spe- 
cialization of  labor,  and  the  like,  often  leaves  us,  after  our  facts 
have  been  obtained  and  our  theories  framed,  helpless  in  the  face 
of  these  facts  and  theories.  A  careful  study  of  the  conditions  of 

410 


corporate  organization,  however,  cannot  fail  to  be  fruitful  in 
positive  results,  for  this  all-important  factor  in  our  social  and 
economic  life  is  of  our  own  voluntary  and  immediate  creation, 
the  product  of  the  law.  If  abuses  exist,  and  intelligence  be  not 
lacking,  these  abuses  can  be  remedied  by  the  same  means  that 
gave  opportunity  for  their  existence;  and  not  only  this,  but  the 
usefulness  of  the  organizations'  themselves  may  be  greatly  in- 
creased as  we  come  to  understand  and  appreciate  more  fully  their 
legitimate  purposes  and  functions. 

Although  the  life  of  our  common  law  has  been,  as  Judge 
Holmes  says,  experience,  the  organism  through  which  this  life 
manifests  itself  is  precedent.  As  is  the  case  in  the  evolution  of 
the  animal  body,  some  parts  of  the  legal  organism  that  once 
served  a  useful  purpose  persist  after  their  usefulness  has  disap- 
peared and  become  a  source  of  disease  and  danger  by  impeding 
functional  activities,  essential  to  life  and  growth  under  new  and 
more  complex  conditions  of  existence. 

The  development  of  the  law  of  corporations  in  England  and 
this  country  affords  a  striking  illustration  of  this  fact.  The  fic- 
tion of  the  personality  of  these  organizations  served  its  purpose 
in  an  age  when  the  conditions  of  business  and  industrial  life  were 
comparatively  primitive  and  searching  legal  analysis  was  un- 
necessary and  unknown;  in  those  days,  it  was  easier,  perhaps 
better  for  the  sake  of  simplicity  and  clearness  of  thought,  to 
attribute  to  a  single  fictitious  person  the  special  rights  and  obli- 
gations of  several  individuals  associated  for  certain  purposes,  than 
to  consider  such  special  rights  and  obligations  as  pertaining  to 
the  individuals  themselves. 

So  long  as  this  question  remains  a  merely  academic  one,  a 
theme  for  legal  scholastics,  we  can  look  with  good-natured  toler- 
ance on  such  solemn  nonsense  as  the  following,  even  though  it 
appears  under  the  guise  of  a  judicial  opinion :  "None  can  create 
souls  but  God;  but  the  king  creates  corporations;  therefore  they 
have  no  souls;"  a  syllogism  whose  conclusion  has  been  of  the 
greatest  use  to  many  reformers  in  making  up  for  a  deficiency  of 
ideas.  But  when  we  find  modern  legal  conceptions  and  rules,  and 
modern  legislation  concerning  economic  policies  of  the  greatest 
moment,  influenced  and  shaped  by  deductions  from  this  ancient 
fiction,  and  also  see  reasoned  out  of  practical  existence  from  the 
same  premise  the  fact  that  the  historic,  legal,  and  moral  justifi- 
cation for  the  existence  of  the  corporation  lies  in  the  advantage 
to  the  public  to  be  gained  thereby,  we  may  well  be  excused  for 
an  intellectual  revolt  on  a  small  scale,  and  believe  that  in  some 

411 


respects,  at  least,  our- present  corporation  laws  are  the  develop- 
ment, not  of  fundamental  truths,  but  of  fundamental  errors. 

It  is  quite  unnecessary  to  discuss  here  the  importance  of  cor- 
porations in  our  present  economic  system,  for  it  scarcely  need 
be  said  that  without  them  this  system  could  not  exist.  Until  we 
go  back  to  the  days  of  the  hand-loom,  of  the  sailing-vessel,  and 
of  travel  by  stage-coach,  or  come  to  governmental  socialism, 
pure  and  simple,  corporations  will  remain  indispensable.  The 
building  and  maintenance  of  railroads,  the  establishing  and  oper- 
ating of  vast  manufacturing  plants,  in  short,  the  thousands  of 
enterprises  of  a  like  character  and  magnitude  that  have  made 
the  past  fifty  years  the  most  wonderful  period  in  the  history  of 
the  human  race,  demand,  from  the  very  nature  of  these  under- 
takings, such  a  continuity  in  the  consistent  prosecution  of  plans 
and  purposes  as  cannot  be  measured  by  the  life  of  an  individual. 
The  immense  amount  of  capital,  also,  required  in  such  enter- 
prises, must  ordinarily  involve  co-operative  investments  on  the 
part  of  a  large  number  of  persons;  of  these,  the  great  majority 
are  necessarily  excluded  from  any  direct  interference  or  control, 
must  entrust  the  management  of  the  undertaking  to  others; 
hence,  to  effect  the  aggregation  of  this  capital  there  must  be,  to 
a  greater  or  less  extent,  limited  liability  on  the  part  of  the  in- 
vestor. 

The  theory  that  corporate  organizations  had  their  origin  in 
ancient  Home  has  of  late  been  questioned  by  some  investigators, 
who  are  inclined  tp  look  for  their  sources  in  the  history  of  the 
early  Greeks.  A  comparative  study  of  institutions  leads  me., 
however,  to  believe  that  in  the  solidarity  and  continuity  of  the 
family,  not  only  among  the  early  Greeks  and  Eomans,  but  among 
many,  if  not  all,  of  the  races  ethnically  related  to  them,  is  to  be 
found  the  source  of  corporations  of  every  kind,  governmental, 
ecclesiastical,  and  lay,  aggregate  and  sole.  Whether  trusts  orig- 
inated in  Rome  or,  as  has  been  contended,  among  earlier  races,  it 
was  in  Rome,  as  the  power  of  the  central  governing  authority 
became  greater,  and  as  the  family  lost  more  and  more  its  auto- 
nomic  character,  that  the  conception  of  the  unity  and  continuity 
of  a  group  of  persons  extended  from  the  association  united  by 
bond  of  kinship  to  other  organizations,  naturally  at  first  to  those 
exercising  some  of  the  functions  of  the  family,  such  as  colleges 
of  priests,  and  afterwards,  as  opportunity  for  great  enterprises 
of  a  private  nature  resulted  from  the  increasing  wealth  and  com- 
merce of  the  city,  to  organizations  whose  main  purpose  was  private 
advantage. 

Fortunately,  it  is  not  necessary  in  this  connection  to  discuss 

412 


or  to  attempt  to  discuss  in  detail  the  development  of  the  Eoman 
corporation.  The  main  fact  here  to  be  noted  is,  that  in  this 
city,  whose  laws  and  whose  legal  conceptions  concerning  cor- 
porate organizations  have  had  so  much  influence  in  shaping  our 
own  views  and  our  own  policy,  these  earlier  forms  of  corpora- 
tions precluded  the  idea  of  private  gain  or  individual  advantage. 

In  early  England,  the  nearest  approach  to  the  modern  cor- 
poration is  the  church.  But  the  early  ecclesiastical  organization, 
even,  did  not  consciously  base  its  unity  or  continuity  upon  the 
succession  of  individuals;  God  or  the  different  saints  to  whom 
the  church  establishments  and  lands  were  dedicated  were  indi- 
vidually held  to  be  their  actual  owners,  and  the  ecclesiastics  were 
regarded  as  administering  the  property  in  the  character  of  agents 
or  stewards.  But  the  ecclesiastical  law,  derived  as  it  was  from 
the  Eoman  law,  on  the  revival  of  the  study  of  the  latter,  easily  ap- 
propriated its  maxims  and  doctrines  and,  as  a  consequence,  the 
proprietor-saint  was  gradually  supplanted  by  a  vague  personifica- 
tion of  the  church ;  the  lay  courts  had  only  to  recognize  this  fic- 
tion to  clear  the  way  in  the  English  law  for  the  being  so  forcibly 
described  in  later  times -as  having  "no  body  to  be  kicked,  and  no 
soul  to  be  damned." 

Side  by  side  with  the  ecclesiastical  organizations  in  England 
there  had  existed  the  local  political  and  administrative  organiza- 
tions,— counties,  hundreds,  boroughs,  towns,  and  manors,  which 
Pollock  and  Maitland  in  their  "History  of  the  English  Law" 
designate,  "for  want  of  a  better  term,"  as  "land  communities." 
Under  the  influence  of  these,  to  'represent  which  no  fictitious 
person  had  been  imagined,  and  of  the  ecclesiastical  organizations, 
we  find  a  new  kind  of  corporations  coming  into  existence,  par- 
taking of  the  character  and  tendencies  of  both  of  the  earlier 
forms.  The  most  important  examples  of  this  new  type  are  the 
trade  and  merchant  guilds  and  the  universities,  the  latter  showing 
the  natural  predominance  of  the  ecclesiastical  influence  in  the 
very  name,  the  word  "universitas"  being  but  a  Koman  law  term 
for  corporation. 

In  discussing  these  new  organizations  the  learned  writers 
above  referred  to  say:*  "The  English  temporal  corporations 
when  they  first  appear  as  ideal  persons,  appear  not  in  the  char- 
acter of  mere  private  persons,  but  in  the  character,  we  may  almost 
say  it,  of  governmental  officers  and  magistrates  who  hold  prop- 
erty in  the  right  of  their  offices.  Their  lands,  their  goods,  are 
few ;  what  they  own  is  jurisdiction,  governmental  power,  and  fiscal 

*Pollock  and  Maitland,  Hist,  of  the  Eng.  Law,  Vol.  1,  p.  493. 

413 


imnrnnities.  This  is  a  characteristic  feature  of  our  temporal  cor- 
porations in  the  first  stage  of  their  existence;  the  artificial  per- 
son conies  into  being  in  order  that  he  may  govern  and  do  jus- 
tice— that  he  may  govern  and  do  justice  to  the  profit  and  ease  of 
the  members  of  the  corporation,  no  doubt,  for  no  one  governs  or 
does  justice  without  gaining  thereby ;  but  it  is  as  much  within  the 
sphere  of  the  public  as  within  the  sphere  of  the  private  law  that 
the  nascent  corporation  becomes  active/' 

As  in  ancient  Home,  so  in  England,  with  the  increase  of  com- 
merce and  wealth,  the  private  character  of  these  organizations 
was  correspondingly  developed,  but  the  extinction  of  all  idea  as 
to  their  public  nature  is  practically  a  thing  of  our  own  day. 

Within  the  past  fifty  years,  as  the  result  of  tremendous  eco- 
nomic forces  that  have  been  called  into  existence,  and  of  legisla- 
tive action  facilitating  the  establishment  of  corporations,  these 
organizations  have  assumed  a  character  in  our  industrial  life  that 
is  almost  revolutionary.  Seventy-five  years  ago,  the  number  of 
corporations  in  this  country,  aside  from  banks,  was  so  small  that 
as  an  economic  factor  they  might  be  safely  disregarded.  The 
conditions  to-day  are  well  set  forth  in  an  address  delivered  by 
Justice  Field  at  the  centennial  celebration  of  the  organization 
of  the  federal  judiciary: 

"Nearly  all  the  enterprises  requiring  for  their  successful  pros- 
ecution large  investments  of  capital  are  conducted  by  corpora- 
tions. They,  in  fact,  embrace  every  branch  of  industry,  and  the 
wealth  that  they  hold  in  the  United  States  equals  in  value  four- 
fifths  of  the  entire  capital  of  the  country.  They  carry  on  busi- 
ness with  the  citizens  of  every  state,  as  well  as  with  foreign  na- 
tions, and  the  litigation  arising  out  of  their  transactions  is  enor- 
mous, giving  rise  to  every  possible  question  to  which  the  juris- 
diction of  the  Federal  courts  extends."* 

Legal  rules  and  conceptions  wherein  transitions  and  modifica- 
tions may  gradually  take  place  are  easily  adapted  by  the  courts 
to  changing  social  and  economic  conditions.  But  when  the  rule 
or  conception  is  of  such  a  nature  that  modification  or  transition 
is  impossible,  if  it  have  the  sanction  of  age  it  is  exceedingly  tena- 
cious of  existence.  Courts  must  adhere  to  precedent  if  legal 
development  is  to  be  orderly  and  consistent,  and  legislation  must 
be  in  accord  with  the  spirit  of  the  legal  development  of  a  coun- 
try as  it  finds  expression  in  the  decisions  of  its  courts  if  the  law 
is  to  remain  an  organic  whole. 

Through  this  wise  and  necessary  conservatism,  however,  an 
erroneous  legal  conception  or  rule,  harmless,  perhaps,  under  the 

*134  U.  S.  742. 

414 


conditions  in  which  it  was  first  formulated  or  came  into  exist- 
ence, may  be  perpetuated  under  new  conditions  that  will  render 
it  not  only  an  evil  in  itself,  but  a  source  of  other  evils  that  will 
survive  the  death  of  the  parent  error.  The  early  ecclesiastics  of 
England  introduced  into  their  canon  law  the  Eoman  fiction  of  a 
corporate  entity,  which  was*  soon  transformed  by  them  into  a 
corporate  personality.  The  lay  courts  grafted  upon  the  English 
law  this  branch,  alien  not  only  in  origin,  but  alien  in  character 
and  alien  in  development.  Much  of  the  law  of  ancient  Home 
has  been  made  a  part  of  the  English  law  and  completely  assimi- 
lated. But  this  conception  of  the  legal  entity,  or  the  artificial 
personality  of  an  organization,  as  such,  was  not  and  is  not  capa- 
ble of  assimilation  or  of  beneficent  tendencies  in  a  system  of 
jurisprudence  whose  very  essence  lies  in  the  fact  that  it  con- 
templates the  individual  as  the  legal  and  political  unit. 

A  corporation  is  a  collection  of  individuals  to  whom,  as  indi- 
viduals, special  pbwers  and  privileges  are  granted  by  the  state, 
the  most  important  and  characteristic  of  these  powers  and  privi- 
leges being  limited  liability  and  capacity  to  transmit  the  special 
rights  so  granted  under  the  sape  conditions  as  those  under  which 
they  were  received.  As  Judge  Finch,  of  New  York,  so  well  said 
in  giving  the  opinion  of  the  court  in  the  case  of  the  People  vs. 
North  Eiver  Sugar  Eefining  Company  (21  N.  Y.  582):  "The 
state  gave  the  franchise,  the  charter,  not  to  the  impalpable,  in- 
tangible and  almost  nebulous  fiction  of  our  thoughts,  but  to  the 
corporators,  the  individuals,  the  acting  and  living  men,  to  be 
used  by  them,  to  redound  to  their  benefit,  to  strengthen  their 
hands  and  add  energy  to  their  capital." 

Wherein  do  we  find  the  justification  for  such  a  grant,  in  other 
words,  for  the  existence  of  the  corporation?  Certainly  not  in 
the  advantage  accruing  to  its  members  from  the  fact  that  they 
are  endowed  with  special  legal  powers  and  privileges  by  the 
state,  for  it  is  a  fundamental  principle  of  our  jurisprudence  that 
all  our  citizens  are  equal  before  the  law.  A  departure  from  this 
fundamental  principle  is  warranted  only  when  an  advantage  to 
the  people  as  a  whole,  to  the  public,  is  to  be  secured  thereby; 
hence,  in  the  securing  of  such  a  public  advantage  must  lie  the 
justification  for  the  existence  of  each  and  every  corporation. 

Blackstone,  when  writing  his  famous  Commentaries  at  the 
beginning  of  the  latter  half  of  the  last  century,  could  say  of  the 
organization  of  corporations:  " — it  has  been  found  necessary, 
when  it  is  for  the  advantage  of  the  public  to  have  any  particular 
rights  kept  on  foot  and  continued,  to  construct  artificial  persons, 

415 


V 

who  may  maintain  a  perpetual  succession  and  enjoy  a  kind  of 
legal  immortality."* 

Chief  Justice  Marshall,  speaking  in  1819  for  the  Supreme 
Court  of  the  United  States  in  the  famous  case  of  Dartmouth 
College  vs.  Woodward,  declared :  "The  objects  for  which  a  cor- 
poration is  created  are  universally  §uch  as  the  government  wishes 
to  promote.  They  are  deemed  beneficial  to  the  country;  and 
this  benefit  constitutes  the  consideration  and,  in  most  cases,  the 
sole  consideration  of  the  grant."** 

It  is  clear  from  the  context  of  this  opinion,  with  succeeding 
clauses,  that  the  term  "benefit"  as  used  here  by  Judge  Marshall 
does  not  signify  the  benefit  that  accrues  to  the  public  from  the 
establishment  of  any  legitimate  and  honorable  enterprise,  but 
only  such  benefit  as  cannot  ordinarily  be  secured  through  the 
undertakings  of  an  individual  or  of  individuals  exercising  only 
such  legal  powers  and  enjoying  only  such  legal  privileges  as  per- 
tain to  citizens  generally.  This  is  clearly  shown  by  the  subse- 
quent declarations:  "Charitable  or  public  spirited  individuals, 
desirous  of  making  permanent  appropriations  for  charitable  or 
other  useful  purposes,  find  it  impossible  to  effect  their  design 
securely  and  certainly  without  an  organizing  act.  The  benefit 
to  the  public  is  considered  as  an  ample  compensation  for  the 
faculty  it  confers." 

Again,  as  late  as  1850,  we  find  the  Supreme  Court  of  North 
Carolina  using  these  words:  "The  purpose  of  making  all  cor- 
porations is  the  accomplishment  of  some  public  good.  Hence 
the  division  into  public  and  private  has  a  tendency  to  confuse 
and  lead  to  error  in  investigation;  for  unless  the  public  are  to  be 
benefited,  it  is  no  more  lawful  to  confer  exclusive  rights  and 
privileges  upon  an  artificial  body  than  upon  a  private  citizen."f 

Unfortunately,  however,  in  Dartmouth  College  vs.  Woodward, 
which  was  to  have  so  great  an  influence  in  shaping  the 'corpora- 
tion laws  of  this  country,  the  court  held  to  the  ancient  fiction 
of  legal  personality,  declaring:  "A  corporation  is  an  artificial 
being,  invisible,  intangible,  and  existing  only  in  contemplation 
of  the  law.  Being  the  mere  creature  of  the  law,  it  possesses  only 
those  properties  which  the  charter  of  its  creation  confers  upon 
it,  either  expressly  or  as  incidental  to  its  existence." 

Here  the  court  denies,  by  necessary  implication,  the  very  prin- 
ciple on  which  is  based  the  doctrine  that  benefit  to  the  public  is 
the  consideration  which  gives  the  charter  of  incorporation  the 
nature  of  a  contract.  If  we  assume  that  the  corporation  is  an 
entity,  a  legal  person,  then  the  theory  that  special  powers  are 

*B1.  Com.,  Bk.  1,  p.  467.       **4  Wheat.  518.       fMills  vs.  Williams,  11  Iredell. 

416 


conferred  upon  it  by  the  state  is  manifestly  illogical,  for  it  is  the 
very  grant  of  these  powers  that  creates  this  entity,  this  person, 
prior  to  the  grant,  the  corporation  does  not  exist;  the  grant,  then, 
must  be  made  to  the  individuals  taking  part  in  the  act  of  incor- 
poration; hence,  upon  these  individuals  and  their  successors  the 
responsibility  to  the  public  must  logically  rest.  If  we  accept  the 
idea  of  a  legal  personality,  we  can  reach  the  final  conclu- 
sion of  the  court  that  the  charter  of  incorporation  is  a  contract 
only  on  the  assumption  that  a  grant  of  special  powers  and  privi- 
leges to  certain  individuals  has  for  its  consideration  a  benefit  to 
the  public,  to  be  derived  from,  and  resting  as  an  obligation  upon, 
a  distinct  individual  created  by  this  same  grant,  hence  coming 
into  existence  subsequently  to  it;  a  proposition  condemned  by 
the  elementary  principles  of  logic  as  well  as  of  law. 

This  shunting  of  public  responsibility  into  space,  upon  the 
man  supposed  to  live  in  the  moon,  "artificial,  invisible,  and  in- 
tangible," has  had  its  deplorable  but  logical  result  in  the  com- 
plete disappearance  of  the  idea  of  any  public  responsibility  what- 
ever on  the  part  of  these  organizations,  for  of  the  two  incon- 
sistent doctrines,  that  of  the  responsibility  of  the  corporation 
to  the  public  was  ultimately  to  go  to  the  wall,  while  that  of  its 
legal  personality  was  to  endure  and  shape  not  only  future  judicial 
opinions  and  future  legislation,  but,  through  its  apparent  sim- 
plicity, to  mould  even  popular  ideas  and  conceptions.  Had  the 
Supreme  Court  in  this,  I  had  almost  said  fateful,  opinion,  looked 
beyond  the  fictitious  person  to  the  real  persons,  whose  rights  and 
privileges  and  responsibilities  arising  through  the  corporation 
were  to  be  affected,  its  reasoning  would  have  been,  as  its  con- 
clusion is,  incontrovertible,  the  fundamental  doctrine  that  the 
justification  of  the  corporation  lies  in  the  fact  that  an  advantage 
to  the  public  is  to  be  secured  thereby,  might  have  remained  a 
guiding  and  formative  principle,  and  many  of  the  evils  now  ex- 
isting might  well  have  been  avoided. 

It  is  a  legal  maxim  that  where  the  reason  ceases  the  law 
ceases,  but  at  present,  in  the  great  majority  of  cases,  either  the 
doctrine  that  charters  of  incorporation  are  contracts  must  form 
a  notable  exception  to  this  rule,  or  the  public  advantage  as  a 
consideration  supporting  such  contracts  must  be  a  fictitious 
creature  of  the  law,  even  more  vague  and  unsubstantial  than  the 
intangible  and  invisible  personality  of  the  corporation,  that  has 
existed  so  long  in  the  imagination  of  learned  jurists. 

Mr.  H.  0.  Havemeyer,  speaking  before  the  United  States 
Industrial  Commission  a  short  time  ago,  expressed  the  logical 
consequence  of  present  conditions,  if  not  the  generally  accepted 

417 


idea  of  to-day,  when  he  said :  "I  maintain  that  it  is  immaterial 
to  the  public  in  what  form  business  is  done, — whether  by  an  indi- 
vidual, firm,  corporation,  or  even  a  trust.  They  are  merely  forms 
of  conducting  a  business,  in  other  words,  machinery  for  the 
operation  of  business." 

Compare  this  with  the  following  words,  spoken  for  the  Su- 
preme Court  of  the  United  States  in  1865 : 

"The  purposes  to  be  attained  [by  incorporation]  are  generally 
beyond  the  ability  of  individual  enterprise,  and  can  only  be  ac- 
complished through  the  aid  of  associated  wealth.  This  will  not 
be  risked  unless  privileges  are  given  and  securities  furnished  in 
an  act  of  incorporation.  The  wants  of  the  public  are  often  so 
imperative,  that  a  duty  is  imposed  on  government  to  provide  for 
them ;  and  as  experience  has  proved  that  a  state  .should  not  at- 
temut  directly  to  do  this,  it  is  necessary  to  confer  on  others  the 
faculty  of  doing  what  the  sovereign  power  is  unwilling  to  under- 
take. The  legislature,  therefore,  says  to  public-spirited  citizens : 
'If  you  will  embark,  with  your  time,  money,  and  skill,  in  an 
enterprise  which  will  accommodate  the  public  necessities,  we 
will  grant  to  you  for  a  limited  period,  or  in  perpetuity,  privileges 
that  will  justify  the  expenditure  of  your  money,  and  the  employ- 
ment of  your  time  and  skill.'  Such  a  grant  is  a  contract  with 
mutual  considerations,  and  justice  and  good  policy  alike  require 
that  the  protection  of  the  law  should  be  assured  to  it."* 

The  idea  that  corporations  are  purely  private  organizations 
in  which  the  public  has  no  concern  is  the  offspring  of  the  ancient 
fiction  of  their  legal  personality,  and  its  predominance,  to  the 
practical  exclusion,  if  not  extinction,  of  the  doctrine  that  they 
are  formed  to  secure  some  advantage  to  the  public,  is  due  to 
patent  causes.  Enterprises  whose  main  object,  at  least  from  the 
standpoint  of  an  increasingly  large  and  increasingly  influential 
body  of  our  citizens,  have  increased  in  number  and  magnitude 
during  the  past  fifty  years  in  an  almost  incredible  manner.  Leg- 
islation, shaped  in  part  by  questionable  means,  and  for  ques- 
tionable ends,  and  in  part  by  desire  to  encourage  great  enterprises, 
has  too  often  thrown  conservatism  to  the  winds ;  and,  finally,  the 
character  itself  of  our  people  has  had  a  tendency  in  the  same 
direction,  for  we  are  inclined  to  look  upon  loose  corporation 
laws  as  democratic  in  their  nature,  inasmuch  as  they  apparently 
offer  equal  privileges  to  all  persons  for  all  purposes;  we  are  apt 
to  lose  sight  of  the  fact  that  the  very  essence  of  these  laws  is  dis- 
crimination, the  granting  to  some  individuals  of  rights  and  privi- 

*BInghamton  Bridge,  3  Wall.  51. 

418 


leges  which  the  sound  policy  of  the  laws  denies  to  our  citizens 
generally. 

Scarcely  less  harmful  in  its  results  than  the  trust  evil,  and 
resulting  from  the  same  conditions,  is  the  organization  of  cor- 
porations for  fraudulent  purposes.  With  but  few  exceptions,  our 
different  state  legislatures  have  opened  the  door  wide  for  abuses 
of  this  nature.  Every  pretense  of  public  need  or  public  ben- 
efit is  openly  discarded,  and  we  have  corporations  organized  to 
conduct  clothing  stores,  to  sell  groceries,  to  sell  drugs,  and,  in 
short,  for  enterprises  that  could  just  as  efficiently  be  undertaken 
without  the  grant  of  special  legal  powers  and  privileges.  The 
sole  object  in  the  great  majority  of  such  cases  is  to  limit  personal 
liability  and  to  avoid  that  responsibility  which  the  members  of 
the  community  should  bear,  and  generally  must  bear.  The  fact, 
also,  that  the  corporation  may  be  organized  without  any  capital 
being  actually  paid  in  is  an  abundant  source  of  evil.  Undoubt- 
edly, there  are  cases  where  the  funds  for  a  great  enterprise  can 
be  more  easily  and  advantageously  secured  after  the  corporation 
has  been  organized.  Ordinarily,  however,  the  record,  "nothing 
paid  in,"  or  the  fact  that  the  promoters  of  the  enterprise  have 
not  sufficient  confidence  in  it  to  lead  them  to  invest  more  than  a 
nominal  amount,  is  a  fairly  sure  indication  that  the  corporation 
laws  have  been  invoked  to  further  speculative  or  fraudulent  de- 
signs. 

As  an  illustration  of  the  conditions  existing  in  the  state  of 
Maine,  I  find  in  a  newspaper  taken  at  random  that  in  this 
state  there  were  recently  filed  on  two  consecutive  days  the  cer- 
tificates of  organization  of  nine  corporations  whose  total  cap- 
italization was  $2,220,000,  while  the  amount  actually  paid  in 
was  $1,093,  or  less  than  one-twentieth  of  one  per  cent.  One  of 
these  corporations  was  to  deal  in  drugs  and  medicines,  and  of 
the  sixteen  officers  whose  names  and  residences  were  given,  eleven 
were  from  another  state,  where  the  laws  pertaining  to  the  organi- 
zations were  more  stringent. 

A  newspaper  published  the  same  day  on  which  this  is  written 
gives  a  list  of  three  corporations  whose  certificates  were  filed  in 
this  state  the  day  before.  Of  these,  one  was  organized  and  incor- 
porated to  conduct  a  sporting  lodge.  Their  total  capitalization, 
$360,000,  of  .which  "nothing  is  paid  in." 

It  may  be  that  every  one  of  these  corporations  was  organized 
for  a  legitimate  purpose,  but  the  fact  remains  that  corporations 
for  fraudulent  or  swindling  purposes  might  just  .as  easily  have 
been  organized.  The  sovereign  power  of  the  state  of  Maine,  if  it 
has  not  been,  may  easily  be,  prostituted  to  further  the  dishonest 

419 


schemes  of  dishonest  men  through  its  present  system  of  loose 
corporation  laws ;  and  this,  I  suspect,  might  be  said  of  nearly  every 
state  in  the  Union. 

In  our  country  at  large,  such  a  thing  as  a  system  of  corporation 
laws  can  scarcely  be  said  to  exist.  From  the  national  standpoint, 
we  have  a  vast  tangle  of  heterogeneous  statutes  which  the  legisla- 
tures of  our  different  states  are  constantly  making  more  inconsist- 
ent and  more  confusing. 

In  general,  interstate  comity  has  thus  far  been  sufficient  to 
prevent  any  state  from  excluding  corporations  organized  in  an- 
other from  transacting  business  within  its  limits,  its  powers,  of 
course,  not  extending  to  that  business  which  is  strictly  commerce 
between  states  and  with  foreign  nations,  but  the  tendencies  of  an 
opposite  nature  are  to  be  seen;  it  is  certainly  becoming  a  ques- 
tion, how  long  a  state  that  is  endeavoring  to  establish  a  rational 
system  of  corporation  laws  should  continue,  to  its  own  detriment, 
to  respect  a  sister  commonwealth  that  has  no  respect  for  its  own 
sovereign  power. 

Though  the  question  as  to  the  nature  of  corporations  is,  in  a 
certain  aspect,  a  purely  legal  one,  it  is  in  another  and  vastly  more 
important  aspect  a  matter  of  grave  economic  and  social  interest  to 
us  all.  Many  of  the  evils  resulting  from  these  organizations  had 
their  origin  in  an  erroneous  legal  conception,  but  so  completely 
have  deductions  from  this  conception,  the  immediate  causes  of 
these  evils,  become  established  as  a  part  of  our  legal  system,  to  a 
certain  extent  by  frequent  judicial  recognition,  and  still  more  by 
positive  legislation,  that  they  are  practically  beyond  the  control- 
ling influence  of  the  courts.  Eeform  must  come  through  legisla- 
tion, and  that  this  legislation  may  be  effective  as  well  as  conserva- 
tive, it  must  be  based  on  clear  conceptions  as  to  its  subject-mat- 
ter— on  an  appreciation  of  the  fact  that  a  corporation  is  but  an 
association  of  individuals,  to  whom,  as  individuals,  the  state 
makes  a  grant  of  special  legal  powers  and  privileges,  of  the  fact, 
also,  that  this  grant  can  be  justified  in  our  system  of  jurispru- 
dence only  on  the  ground  that  a  definite  advantage  to  the  public 
is  secured  thereby. 

Trusts  and  fraudulent  corporations  are  the  results  of  vices  and 
imperfections  in  our  corporation  laws.  When  these  are  remedied, 
and  not  until  then,  will  the  evils  of  which  they  are  the  cause  dis- 
appear. In  the  domain  of  law,  which  is  that  of  ideas,  and  prin- 
ciples, and  reason,  ultimate  truths  are  the  only  safe  foundation 
on  which  to  build.  Legal  fictions  often  have  highly  important 
functions  in  unifying  legal  rules;  they  serve,  so  to  speak,  as  a 
scaffolding,  useful  in  raising  the  structure  of  our  jurisprudence, 

420 


but  constituting  no  real  part  of  it.  In  determining  and  shaping 
important  economic  conditions,  however,  fictions,  legal  or  other- 
wise, have  no  place;  we  must  be  guided  by  the  absolute  facts  of 
human  life  and  human  experience. 

As  civilization  advances,  and  as  science,  and  wealth,  and  trade 
increase,  the  public  and  private  relations  of  the  different  members 
of  society  become  more  complex  and  the  problems  that  our  legis- 
lative bodies  are  called  upon  to  solve  necessarily  demand  on  their 
part  increasing  skill  and  intelligence.  To  understand  even  a 
branch  of  our  legal  system  has  become  the  business  of  a  learned 
and  laborious  profession.  But  the  great  principles,  along  whose 
lines  the  development  of  our  substantive  law  should  proceed, 
must  be  the  business  of  all  enlightened  and  thoughtful  men,  if  we 
are  to  realize  in  our  jurisprudence  that  justice  so  well  described 
by  the  Eoman  jurist  as  "the  set  and  constant  purpose  that  gives 
to  every  man  his  due." 

Assuming  that  the  views  set  forth  in  this  paper  embody  cor- 
rect principles,  the  next  question  is:  How  can  we  make  these 
principles  dynamic,  render  them  effective  in  shaping  actual  legis- 
lation? 

The  first  step  in  this  direction  is,  I  believe,  an  organized  effort 
to  secure  uniformity  of  the  corporation  laws  of  the  different 
states. 

At  present  the  great  difficulty  in  the  way  of  the  application  of 
correct  and  rational  principles  to  the  development  of  our  corpora- 
tion law,  especially  in  the  all-important  matter  of  organization, 
lies  in  the  fact  that  certain  states  are  ready  to  prostitute  their 
sovereign  power  for  sake  of  revenue,  and  to  enter  into  competition 
to  secure  patronage  in  this  shameless  traffic,  regardless  of  their 
own  honor  and  of  what  is  rightfully  and  justly  due  to  other  com- 
monwealths. 

From  such  a  traffic  and  such  a  competition  not  only  does  there 
result  a  continuous  leveling  down  on  the  part  of  the  states  en- 
gaged in  it,  but  almost  insurmountable  obstacles  are  placed  there- 
by in  the  way  of  those  states  seeking  to  maintain  or  establish 
proper  and  rightful  standards.  A  general  and  strongly  sustained 
effort  to  secure  uniformity  would,  above  anything  else,  counter- 
act these  demoralizing  influences,  and  tend  to  substitute  public 
welfare  in  the  place  of  short-sighted  selfishness  as  a  determining 
factor  in  our  legislation.  Undoubtedly  a  few  states  might  be  dis- 
posed to  resist  efforts  looking  towards  reform,  but  concert  of  ac- 
tion on  the  part  of  the  others  in  regard  to  corporations  organized 
under  the  laws  of  these  recalcitrant  commonwealths  would  reduce 
their  power  for  evil  to  a  minimum. 

.  421 


Approximate  uniformity  of  the  corporation  laws  of  the  dif- 
ferent states  being  secured,  national  legislation,  also,  could  be 
more  intelligently  framed  for  the  purpose  of  complementing  state 
legislation,  and  made  much  more  effective  in  meeting  those  evils 
which  because  of  the  exclusive  control  of  Congress  over  inter- 
state commerce  the  state  legislatures  cannot  reach.  Federal  legis- 
lation, however,  as  affecting  the  evils  resulting  from  the  abuse 
of  corporate  power  and  privileges  can  be  nothing  more  than  com- 
plementary, the  reform  must  be  essentially  worked  out  by  state 
action. 

The  American  Bar  Association  has  already  done  most  excel- 
lent work  in  securing  uniformity  ~of  state  legislation  along  certain 
lines,  notably  that  of  commercial  paper,  and  commissions  on  uni- 
formity of  state  laws  have  been  provided  for  in  a  majority  of  the 
states.  It  seems  certain  that  if  this  conference  with  its  great  in- 
fluence should  make  an  earnest  and  organized  effort  in  conjunc- 
tion with  these  bodies  to  secure  uniformitv  of  corporation  laws 
throughout  the  Union,  a  high  degree  of  success  would  be  assured 
from  the  outset. 

To  claim,  however,  that  even  the  complete  success  of  this  ef- 
fort would  abolish  all  the  evils  arising  from  corporate  organiza- 
tion would  be  absurd.  Abuses  and  evasions  of  the  law  and  imper- 
fections in  the  law  itself  will  continue  to  exist  until  human  nature 
and  human  foresight  have  reached  a  far  higher  stage  of  devel- 
opment than  that  of  to-day.  The  surest  way,  however,  to  meet 
and  minimize  these  evils  is  through  a  rational  and  intelligent 
application  of  the  fundamental  principles  of  right  and  justice, 
and  next  in  importance  to  a  clear  appreciation  of  these  principles 
and  of  their  relation  to  the  problem  before  us,  is  the  removal, 
as  completely  as  may  be,  of  the  obstacles  which  obstruct  the  appli- 
cation of  them. 


HENRY  D.  BAKEE. 

Associate  Financial  Editor  New  York  Evening  Post. 

Literal  accomplishment  of  what  Mr.  W.  J.  Bryan  has  termed 
the  "Democratic  idea  that  if  you  make  the  masses  prosperous  their 
prosperity  will  find  its  way  up  and  through  every  class,"  was 
responsible  for  the  increased  resources  and  confident  venturesome- 
ness  of  the  financial  and  investing  classes,  such  as  caused  the 
recent  rapid  multiplication  of  corporations  known  as  "trusts." 
The  fine  crops  and  high  prices  of  1897  and  1898  brought  vast 
wealth  to  the  masses,  while  the  relief  from  silver  agitation  put 

422     • 


vast  sums  of  money  that  had  been  hoarded,  into  the  channels  of 
circulation.  Some  of  the  phenomena  which  arose  during  1898 
out  of  the  same  conditions  so  favorable  to  the  growth  of  trusts 
were  witnessed  in  the  magnificent  success  of  the  nopular  war  loan 
of  $200,000,000  hurriedly  raised  without  a  ripple  of  disturbance 
to  general  business,  the  war  bonds  soon  selling  at  a  premium  of 
9  above  par.  The  United  States  became  a  creditor  instead  of  a 
debtor  nation  in  its  relation  to  the  general  world  of  finance. 
Savings  banks  reduced  long  established  rates  on  deposits,  and  cli- 
ents of  banks  of  deposit  were  notified  that  balances  no  longer 
carry  interest.  Some  localities  bought  foreign  exchange  for  an 
investment ;  some  communities  in  the  far  West  became  lenders  of 
money  in  Europe. 

The  promoters  of  trusts  were  not  in  evidence,  however,  during 
the  period  between  the  blowing  up  of  the  Maine  on  February  14th 
and  Dewey's  victory  at  Manila  on  May  1st  of  1898.  Deals  that 
had  not  been  successfully  finished  before  the  catastrophe  in  Ha- 
vana harbor  were  sent  up  the  spout. 

The  glorious  news  from  Manila  not  only  put  the  nation  in 
ecstasy  of  patriotic  joy,  but  it  also  brought  the  promoter  of  trusts 
out  of  the  woods.  The  destruction  of  Cervera's  fleet  in  July  and 
the  end  of  the  election  uncertainty  in  November  marked  further 
stages  in  the  growth  of  investment  and  speculative  confidence. 
Toward  the  close  of  the  year  not  only  was  prosperity  extremely 
pronounced  in  all  branches  of  business,  but  also  millions  of  dollars 
had  become  added  to  the  value  of  all  kinds  of  securities.  News- 
papers were  announcing  new  trusts  at  about  the  rate  of  three  a 
day;  time  and  call  money  ranged  from  3^  to  4  per  cent.  Such 
conditions  of  extreme  public  confidence,  of  cheap  money,  of  rising 
security  values,  all  essential  to  the  successful  promotion  of  trusts, 
continued  for  about  the  first  month  and  a  half  of  the  present  year. 
Tremendous  profits  became  shown  in  the  underwriting  of  indus- 
trials. In  a  great  many  instances,  underwriters  sold  their  rights 
and  made  fortunes  before  it  was  necessary  to  pay  a  cent  of  cash 
on  their  subscriptions.  The  belief  became  prevalent  that  by 
simply  signing  subscription  lists  it  would  be  possible  to  realize 
profits  of  from  10  to  20  points  on  the  rights  before  there  could  be 
any  call  for  cash.  It  was  the  policy  of  promoters  to  foster  the  pre- 
liminary speculations  in  rights  by  hints  or  announcements  to  the 
effect  that  the  heavy  over-subscriptions  would  necessitate  the  pro- 
portionate cutting  down  in  the  allotments  of  stock  to  subscribers. 
The  purchase  of  rights  by  those  who  wanted  to  be  sure  of  full 
allotments  of  stock  usually  more  than  offset  sales  of  the  rights 
by  those  who  wanted  to  take  profits  before  it  was  necessary  to 

423 


meet  the  call  for  cash.  Often  advances  in  the  underwriting  pre- 
mium would  be  accelerated  by  the  scrambling  endeavor  to  buy 
back  rights  after  it  was  discovered  or  feared  that  only  a  part  of 
the  stock  would  be  received  which  had  already  been  sold  for  de- 
livery "when  issued."  The  economics  due  to  consolidation,  natur- 
al growth  of  business,  cheapness  of  money,  increase  in  general 
prosperity  and  absence  of  political  disturbances  in  all  parts  of  the 
world,  were  argumentative  features  to  which  the  speculative  pub- 
lic eagerly  listened. 

Toward  spring  of  the  present  year  the  "trust"  movement  had 
become  greatly  overdone  in  the  opinion  of  those  who  looked  at  it 
purely  from  the  financial  standpoint.  Despite  the  unprecedented 
plethora  of  money  in  the  country,  money  was  growing  dearer, 
owing  to  the  absorption  of  enormous  sums  of  capital  in  the  nota- 
tion of  the  new  industrial  issues.  Bankers  began  to  entertain 
misgivings,  and  their  discrimination  against  industrials  as  col- 
lateral began  to  hurt  their  progress  in  the  stock  markets.  Several 
big  promotions  then  pending  became  conspicuous  failures.  In  one 
or  two  instances  underwriters,  fearing  losses  on  their  subscrip- 
tions, forced  the  closing  of  the  deals  before  they  could  become 
consummated  by  payment  of  cash.  The  sudden  death  of  ex- 
Governor  Flower,  who  had  been  the  most  potent  bull  leader  in 
the  market  for  industrials,  hit  his  own  specialties  hard  and  sym- 
pathetically wrought  injury  to  industrials  as  a  class.  The  plan 
for  effecting  the  most  gigantic  combination  of  the  age  to  include 
the  Carnegie  properties,  the  Federal  Steel  Company,  the  Ameri- 
can Steel  and  Wire  Company,  the  National  Steel  Company,  the 
American  Tin  Plate  Company  and  lesser  concerns,  fell  through. 
The  stock  issues  of  the  trusts  already  created  now  show  losses 
in  value  of  from  10  to  50  per  cent.  The  trust  promoter  to-day 
admits  that  future  attempt  at  trust  creation  will  be  exceedingly 
uphill  work. 

It  is  thus  shown  that  the  trust  movement  has  owed  its  imme- 
diate origin  to  an  unprecedented  plentifulness  of  money  and  to 
an  exceedingly  high  state  of  public  confidence  such  as  always 
tends  to  make  capital  venturesome.  Tariffs,  railroad  discrimina- 
tion and  lack  of  publicity  may  serve  to  perpetuate  the  existence 
of  at  least  some  of  the  trusts  lately  created,  but  have  had  little 
or  no  relevant  connection  with  their  origin.  The  trust  motive  has 
been  the  speculative  motive  to  make  big  profits  in  quick  time. 
Perhaps  the  American  people  would  rather  now  enjoy  prosperity 
in  which  great  trusts  share  with  themselves,  than  endure  hard 
times  in  which  neither  great  trusts  nor  themselves  can  find  meat 
whereby  to  grow  and  thrive.  The  nation  was  sad  and  horrified 

424 


over  the  blowing  up  of  the  Maine,  notwithstanding  the  fact  that 
the  disaster  interrupted  for  a  time  the  promotion  of  trusts. 
Equally  jubilant  and  thrilled  with  patriotic  spirit  were  the  Ameri- 
can people  on  hearing  of  Dewey's  triumph  at  Manila,  which  was 
not  diminished  by  the  fact  that  the  victory  was  the  sunlight  which 
brought  the  promoters  of  trusts  out  of  their  holes,  so  to  speak. 

Payments  through  the  principal  clearing  houses  of  the  coun- 
try are  now  about  37  per  cent  greater  than  a  year  ago,  and  57  per 
cent  greater  than  in  1892.  East  bound  railroad  tonnage  is  nearly 
double  that  of  a  year  ago.  The  number  of  business  failures  is 
about  half  of  that  of  a  year  ago,  and  a  third  as  great  as  in  1896. 
The  country's  gold  reserve  to-day  stands  above  the  $250,000,000 
mark.  Generally  advancing  prices  in  manufactured  lines  of  goods 
have  attended  the  increasing  prosperity.  Although  such  ad- 
vances have  not  been  confined  to  articles  produced  by  trusts,  but 
have  included  furniture,  products  of  the  packing  house,  and  other 
articles  in  which  trade  is  unquestionably  regulated  by  conditions 
of  competition  and  of  demand  to  supply,  yet  there  is  a  good  deal 
of  complaint  that  practically  all  late  advances  in  prices  have  been 
produced  by  the  trust  arbitrarily  and  for  their  own  profit,  and 
that  therefore  they  afford  no  indication  of  conditions  benefiting 
the  country.  It  is  true  that  the  trusts  in  nearly  every  instance 
after  their  recent  formations,  have  marked  up  prices,  and  yet 
considering  the  increased  cost  of  raw  material  entering  into  pro- 
duction and  the  fact  that  wages  have  been  generally  advanced, 
it  cannot  be  correctly  said  that  the  trusts  have  made  unfair  use 
of  their  trade  opportunities.  Where  they  have  advanced  prices 
more  than  would  seem  to  have  been  warranted  by  advances  in  raw 
materials,  such  advances  seem  usually  to  have  effected  simply  an 
adjustment  of  prices  to  some  basis  of  fixed  profits  such  as  had 
existed  before  the  hard  times  period,  or  as  in  the  case  of  the 
Biscuit  Consolidation  for  instance,  before  a  competitive  war  had 
brought  earnings  down  below  the  cost  of  production,  and  had 
threatened  practically  the  whole  business  with  bankruptcy. 

In  the  case  of  the  best  managed  industrial  companies  the  pol- 
icy has  been  to  keep  prices  of  products  high  enough  to  allow  rea- 
sonable profit  on  capital  invested,  but  low  enough  to  offer  no  in- 
ducements for  competitors  to  enter  the  business.  In  the  case  of 
the  Glucose  Sugar  Refining  Company,  which  is  the  oldest  of  the 
recent  industrials,*  President  Matthissen,  at  the  annual  meeting 
of  stockholders  last  year  explained  as  follows  the  application  of 
this  policy:  "There  is  not  at  this  time  a  bushel  of  corn  being 
ground  by  any  concern  except  those  in  our  company.  We  do 

*Organized  August,  1897. 

425 


not  intend  to  pursue  the  policy  of  making  spectacular  profit  in 
the  beginning  and  dwindling  at  the  end.  We  are  in  business 
for  a  long  pull.  For  instance,  on  a  ten-year  run  we  might  have 
raised  prices,  made  $5,000,000  the  first  year,  $2,500,000  the  next, 
$1,000,000  the  next,  and  down  to  nothing  at  the  end  of  ten  years. 
It  is  better  business  to  be  moderate  and  earn  $2,000,000  a  year 
for  ten  years,  which  would  be  $20,000,000  in  profits,  against  a 
loss  of  $10,000,000  the  other  way.  We  did  for  a  short  time  make 
the  mistake  in  the  beginning  of  putting  the  price  too  high,  but 
it  did  not  last  long.  If  we  had  maintained  that  policy,  we  would 
have  had  sixteen  or  seventeen  competitors,  against  none  as  it  is 
now."  Generally  speaking,  from  the  standpoint  of  the  investor, 
it  is  considered  better  to  own  securities  of  a  trust  which  makes  its 
money  by  saving  money  through  especial  economies,  than  it  is 
to  own  securities  of  a  trust  which  is  known  to  make  its  money 
through  practicing  extortion  on  consumers.  In  the  case  of  long- 
lived  industrial  corporations  like  the  Standard  Oil  Company,  suc- 
cess seems  to  have  been  at  least  in  large  measure  due  to  a  policy 
of  lowering  rather  than  raising  prices.  This  fact  investors  are 
beginning  to  appreciate,  and  is  causing  them  to  discriminate. 
Considerable  blame  has  been  thrown  on  the  iron  and  steel  trusts 
owing  to  the  enormous  advances  which  have  taken  place  in  prices 
of  products  in  the  iron  and  steel  industry.  Quotations  on  steel 
billets  are  about  $37  per  ton  to-day  as  against  $14.50  per  ton  one 
year  ago,  while  various  steel  products  are  quoted  relatively  the 
same.  As  pig  iron,  however,  is  now  $24  per  ton  as  against  $10  per 
ton  one  year  ago,  it  is  evident  that  the  advances  in  finished  steel 
products  have  been  legitimate.  Practically  all  the  companies 
engaged  in  the  iron  and  steel  business  now  have  contracts  ahead 
which  will  keep  their  furnaces  active  at  full  capacity  for  six 
months  to  come.  If  the  general  r>rosperity  had  not  caused  an 
enormous  demand  for  steel  products,  the  price  of  pig  iron  could 
hardly  have  advanced,  for  manufacturers  would  not  create  a  de- 
mand for  more  pig  iron  than  they  would  expect  to  sell  as  finished 
product  from  their  foundries. 

Owing  to  the  fact  that  the  American  Tin  Plate  Company  is 
about  the  most  conspicuous  example  of  a  protected  trust,  the 
sharp  advances  it  has  made  in  prices  have  drawn  down  upon  it 
much  aggressive  criticism,  which  seems  to  be  unfair  in  the  ex- 
treme, as  shown  by  the  following  data  furnished  me  by  President 
Eeid  of  the  company  late  in  the  month  of  August.  Since  the 
organization  of  the  company  pig  tin  had  shown  an  advance  from 
12£  cents  to  33  cents  per  pound;  15  per  cent  more  was  being  paid 
for  skilled  labor,  and  20  per  cent  more  for  unskilled  labor;  the 

426 


price  of  acids  used  in  making  tin  plate  had  gone  up  25  per  cent; 
steel  billets,  of  which  about  10,000,000  boxes  were  figured  as  the 
company's  probable  consumption  for  the  year,  had  advanced  one 
dollar  per  box;  the  increases  in  the  bill  for  castings,  etc.,  to  keep 
the  plants  in  repair,  would,  it  was  estimated,  be  about  double 
what  they  would  have  amounted  to  a  vear  ago.  Yet  despite  those 
great  increases  in  the  cost  of  supplies  and  labor,  finished  tin  plates 
were  quoted  at  only  $4.37-£  as  against  $2.50  one  year  ago.  As  the 
protection  on  tin  plate  makes  the  price  which  would  induce  im- 
ports of  tin  plate  $5.58,  it  is  therefore  evident  that  the  company 
has  not  by  any  means  availed  itself  of  the  full  opportunity  allowed 
it  by  the  tariff. 

The  increase  in  legitimate  business  in  this  country  during  the 
past  year  has  resulted  in  the  establishment  of  a  fairly  normal  ratio 
between  the  supply  and  demand  for  money.  It  has  put  a  limita- 
tion on  trust  promotions,  practically  ending  the  movement  before 
it  could  cause  a  financial  crash.  At  the  present  time  the  pros- 
perity of  the  country  allows  opportunity  for  unlimited  business 
development  of  all  legitimate  kinds.  The  trust  movement  was 
an  early  incident  of  our  present  prosperity.  Trusts  are,  how- 
ever, no  longer  the  product  of  our  prosperity.  Whether  or  not 
we  would  be  more  prosperous  without  the  trusts  is  a  question  con- 
cerning which  views  and  theories  now  may  differ  and  which  can 
only  be  definitely  and  thoroughly  settled  by  the  economic  data 
of  the  next  few  years. 


JOHN"  I.  YELLOTT. 

Member  Maryland  Bar. 

The  "trust"  problem  is  of  that  character  to-day  that  the 
American  people  are  called  upon  to  deal  with  a  condition,  rather 
than  with  theories  on  the  subject.  The  consideration  of  facts  as 
they  exist  in  consequence  of  what  the  "trust"  and  the  "combine" 
are  doing  with  the  masses  of  the  American  people,  is  of  more 
practical  importance  than  any  indulgence  in  nice  and  finely 
wrought-out  theories  as  to  what  the  "trust"  ought  to  do — as  to 
what  it  can  do,  as  to  what  minor  laws  found  in  the  trade  and 
financial  circles  of  business  may  compel  it  to  do,  and  what  it  may 
bo  expected  to  do  for  the  public  good  in  the  future — if  let  alone. 
To  me,  the  competent  theorist  is  always  entertaining,  but  I  am 
ever  slow  to  adopt  theories  that  I  know  to  be  contrary  to  certain 
fixed  laws,  and  unsupported  by  present  or  past  facts. 

In  the  matter  of  production  and  distribution,  there  is  one  law 

427 


regulating  both  the  buying  and  selling  interests  of  civilized  man 
so  fixed  and  so  unvarying  in  its  long  operation,  that  it  has  been 
looked  upon  as  a  natural  law.  It  is  the  law  of  competition.  It, 
in  conjunction  with  the  recognized  laws  of  supply  and  demand, 
is  the  one  great  force  all  the  time  at  work  for  the  healthful  reg- 
ulation of  production,  distribution,  and  values.  Any  system  of 
production,  or  of  distribution,  including  the  commanding  in- 
dustry of  transportation,  that  is  in  contravention  of,  or,  at  vari- 
ance with  this  great  law  can  have  but  one  result,  to-wit:  injustice 
and  wrong  to  the  weak  and  undue  imposition  upon  both  the  con- 
sumer who  must  buy  in  the  market  and  the  producer  of  the  raw 
material  who  must  sell!  When  you  destroy  competition  in  the 
production  of  the  finished  article  required  for  the  use  of  man, 
you  destroy  two  open  markets — that  in  which  the  consumer  may 
buy  to  advantage,  and  that  in  which  the  seller  of  the  raw  article 
may  sell  to  competitors.  You  do  more,  you  give  to  the  producer 
the  right  to  dictate  the  price  which  the  consumer  must  pay  for 
the  finished  article,  and  the  power  to  say  to  the  producer  of  the 
raw  material  what  he  shall  take  for  the  product  of  his  labor ;  you 
give  to  that  producer  the  right  to  dictate  and  fix  the  price  that 
shall  be  paid  for  the  labor  required  to  convert  the  raw  material 
into  the  finished  product.  You  do  what  is  worse,  you  make  a 
favored  class  of  the  few  chartered  producers  and  transporters,  and 
give  to  that  class  unlimited  authority  to  say  to  the  millions  of  our 
population  what  they  shall  pay  for  food,  raiment  and  everything 
used  by  them  for  comfort,  luxury  or  necessity,  and  what  every 
man  shall  receive  for  the  product  of  his  labor.  A  condition  of 
things  abhorrent  to  the  common  law,  before  the  American  Con- 
stitution was  thought  of. 

No  legal  authorization  for,  or  acquiesence  in,  any  system  of 
production  or  class  favoritism  can  be,  under  the  American  form 
of  government,  without  violation  of  its  every  valued  principle. 
Our  government  is  founded  upon  the  eternal  foundation  of 
human  equality.  When  organized  after  the  vindication  of  this 
principle  in  the  war  of  the  Revolution,  the  object  of  the  Govern- 
ment was  declared  to  be:  "To  establish  justice";  "to  promote 
the  general  welfare" ;  "to  secure  the  blessings  of  liberty".  Later 
ir  our  history  the  fourteenth  amendment  to  the  Constitution  was 
adopted,  which  embodied  all  that  statesmanship  of  the  country 
had  ordained  for  accommodating  the  organic  law  to  our  then 
condition.  It  provides,  "£To  state  shall  make  or  enforce  any  law 
which  shall  abridge  the  privileges  or  immunities  of  citizens  of  the 
United  States;  nor  shall  any  State  deprive  any  person  of  life, 
liberty,  or  property,  without  due  process'of  law,  nor  deny  to  any 

428 


person  within  its  jurisdiction  the  equal  protection  of  the  law/' 
The  meaning  of  these  privileges  and  immunities  has  been  denned 
by  the  courts  as  those  rights  which  are  fundamental  under  every 
free  government,  including  the  right  to  acquire  and  possess  prop- 
erty of  every  kind,  and  to  pursue  and  obtain  happiness  and  safety, 
subject  to  such  restraints  as  government  may  prescribe  for  the 
general  good  of  the  whole. 

All  monopolies  in  any  trade  or  manufacture  are  an  invasion 
of  these  privileges,  for  they  encroach  upon  the  liberty  of  the  cit- 
izen to  acquire  property  and  pursue  happiness,  and  were  held  to 
be  void  at  common  law  as  long  ago  as  the  reign  of  Elizabeth. 

No  State  of  the  Union  can  have  the  power  to  create  a  monopoly 
in  any  industry  by  incorporating  a  number  of  men  into  one  body, 
without  doing  violence  to  the  Constitution  of  the  country.  What 
il  cannot  directly  do  it  is  without1  power  to  do  by  indirection. 
The  incorporation  of  any  body  of  men  with  monopolistic  power 
is  in  contravention  of  the  spirit  and  the  letter  of  our  form  of 
government  and  its  written  Constitution.  If  the  organized  trusts 
and  combines  are  possessed  of  monopolistic  powers  and  have 
monopolistic  tendencies,  then  they  should  be  abolished  or  brought 
within  legal  control,  without  regard  to  the  fact  whether  they  be 
advantageous  or  disadvantageous.  They  are  an  un-American  in- 
stitution, though  flourishing  in  America  only,  and  should  not  for 
that  reason  be  allowed  to  grow  and  multiply. 

Now,  Mr.  Chairman,  it  would  seem  that  the  all-important 
questions  involved  in  the  trust  subject,  are : 

First:  Are  trusts  and  combines  as  now  existent  in  the 
United  States  monopolies,  or  of  monopolistic  character  and 
tendency? 

Second:  Are  they  of  such  character  in  their  operation  and 
modes  of  business  as  to  infringe  upon  the  Constitutional  rights  of 
the  American  citizen? 

Third :  If  monopolistic  and  an  invasion  of  the  rights  of  the 
citizen,  what  is  the  proper  remedy  to  apply? 

I  desire  to  discuss  briefly  the  first  two  propositions,  and  in 
doing  so  I  hope  to  be  pardoned  for  dealing  in  facts  more  than 
theories.  The  origin  or  birth  of  the  "trust"  in  our  general  indus- 
tries is  a  mystery,  but  necessary  to  be  inquired  into  in  order  to 
discover  the  laws  that  are  likely  to  control  its  existence  and 
growth. 

One,  and  perhaps  the  greatest  trust  magnate  of  the  land,  has 
solemnly  affirmed  that  the  protective  tariff  is  the  mother  of  the 
"trust,"  but  when  we  remember  that  it  was  that  magnate's  ox  that 
was  gored  by  the  tariff  of  which  he  was  speaking,  this  charge  of 

429 


maternity  must  be  accepted  with  some  allowance.  I  believe  this 
"Protective  Tariff"  has  enough  sins  to  answer  for  at  the  bar  of 
public  opinion  without  being  charged  with  the  motherhood  of  this 
monster. 

Protection  is  but  the  foster  mother,  if  mother  at  all,  and  I 
am  disposed  to  yield  to  it  the  rightful  claim  only  of  being  wet- 
nurse  to  the  trust;  it  has  surely  kept  it  in  vigorous  life  and  pos- 
sibly aided  at  the  birth.  Others,  with  plausibility,  have  advanced 
the  theory  that  the  "trust"  is  the  result  of  evolution  in  trade  and 
manufacture  into  which  so  many  improved  methods  have  been 
injected.  Some  ascribe  to  the  great  prosperity  of  our  people  in 
the  last  few  years  the  life-giving  cause,  whilst  still  others  claim 
the  concentration  of  wealth  in  the  productive  industries  to  be  the 
result  of  natural  laws  of  business  which  demand  some  saving  in 
the  wastefulness  of  the  competitive  system.  A  few  days  ago  I 
read  an  able  article  in  one  of  our  most  valued  monthlies,  from  the 
pen  of  an  apparent  advocate  of  the  "trust" — the  Hon.  George  E. 
Eoberts,  Director  of  the  United  States  Mint,  which  came  nearer 
to  my  views  of  the  causes  constituting  the  true  parentage  of  the 
American  "trust"  than  anything  I  have  elsewhere  seen.  I  beg 
to  quote  briefly  from  the  article,  page  305,  "Eeview  of  Keviews," 
for  September.  The  writer  says:  "Let  us  inquire  about  the 
forces  that  have  brought  on  this  general  movement  of  the  indus- 
tries into  combinations.  It  is  a  primary  fact  that  the  impelling 
motive  has  been  the  low  returns  recently  earned  by  capital.  It 
has  been  difficult  to  make  profits  when  competition  has  been  open 
and  active."  The  writer  then  proceeds  to  assign  other  causes 
for  concentration,  but  the,  first  of  the  forces  at  work,  as  stated 
by  him,  is  the  one  great  power,  which  is,  in  effect,  that  money, 
finding  it  could  no  longer  get  satisfactory  returns  from  its  accus- 
tomed user,  determined  to  concentrate  in  the  form  of  the  trust 
or  the  combine  for  the  purpose  of  nullifying  the  natural  law  of 
competition,  and  exacting  from  the  masses  of  the  people  such 
profit  as  it  might  dictate.  Practical  monopoly  only,  can  destroy 
competition,  and  if  tbat  be  the  object  of  combination  in  the  indus- 
tries, it  follows  that  whatever  the  trust  of  to-day  be,  the  very  law 
of  its  existence  will  develop  it  into  "odious"  monopoly. 

Again,  the  trust  of  to-day,  which  is  doing  its  work  of  ruin 
amongst  the  masses,  is  an  incorporated  body,  and  is  made  up  of 
the  smaller  corporations  generally.  It  is  a  man-made  machine 
sent  forth  into  the  world  of  the  industries  to  compete  with  the 
human  being,  with  unlimited  power  to  acquire  wealth  and  seek 
gain  in  the  particular  field  for  which  it  was  made,  without  one 
of  the  finer  instincts  with  which  the  natural  man  is  endowed; 

430 


without  soul  to  be  saved  or  body  to  die,  or  conscience  to  restrain, 
it  is  actuated  by  one  human  instinct  only — greed  for  money! 

I  am  the  friend  of  the  corporation  honestly  created  for  a 
legitimate  purpose.  For  centuries  it  has  been  a  necessity  in  civ- 
ilized society,  and  has  done  and  is  destined  to  do  more  for  its 
advancement  and  full  development,  but  none  is  blind  to  the 
fact  that  the  corporation  needs  to  be  properly  regulated  and  con- 
trolled by  law.  It  has  little  regard  for  individual  right  and  in- 
dividual privilege  unless  conscious  of  the  fact  that  the  violation 
of  the  one  or  the  invasion  of  the  other  invites  inevitable  leg"al 
responsibility. 

Such  being  the  constituent  parts  of  the  five  hundred  or  more 
giant  corporations  which  have  taken  control  of  about  all  the  in- 
dustries of  the  land,  it  follows  that  if  absolute  monopoly  will  give 
them  greater  gains  for  their  stockholders,  there  will  be  no  hesita- 
tion in  establishing  it.  If  the  smaller  corporations  can  combine 
for  monopolistic  purposes,  the  larger  ones  will  not  be  slow  in 
combining  for  the  establishment  of  actual  "monopoly"  in  all 
industries. 

I  do  not  contend  against  the  belief,  or  the  fact,  that  as  a 
general  rule  production  on  a  large  scale  is  cheaper  than  on  a 
small  one.  This  is  a  rule  of  general  application,  but,  sir,  I  do 
contend  that  if  the  producing  agency,  by  reason  of  its  great  pro- 
portions, be  removed  from  the  field  of  competition,  there  is  no 
incentive  to  the  economic  saving  in  production  that  is  required 
in  the  competitive  field.  Economic  improvement  and  invention 
result  from  the  necessities  growing  out  of  competition.  Destroy 
this  necessity,  and  you  banish  the  incentive  to  improve  and  invent 
and  adopt  cheaper  modes  of  production.  It  is  less  trouble,  easier 
and  safer  to  profit  by  increase  of  price  or  adulteration,  when  it 
is  known  the  consumer  must  buy  your  article,  whatever  its  cost  or 
its  quality. 

But,  sir,  conceding  the  trust  and  combine  can  produce  cheaper 
than  the  individual,  or  company  on  a  smaller  scale,  there  is  no 
known  law  of  unvarying  application  by  which  the  consumer  will 
be  benefited,  or  the  seller  to  the  combine  be  protected.  The  buy- 
ing market  must  depend  solely  upon  the  conscience  of  the  trust 
producer  for  any  share  in  the  benefits  of  cheapened  production. 
The  producer,  of  monopolistic  character,  has  no  interest  in  allow- 
ing the  general  public  to  share  in  such  benefits.  If  it  be  an 
incorporated  producer,  there  is  no  conscience  to  regulate  the  sell- 
ing price,  except  loyalty  to  the  stockholder  in  its  concern,  and 
that  conscience  points  with  constant  finger  to  fat  dividends,  be 
the  stock  bona  fide  or  fictitious!  The  advance  in  the  price  of 

431 


nearly  all  trust  productions,  from  the  moment  the  trust  got  full 
control  of  the  production,  may  be  cited  in  support  of  the  truth 
and  the  soundness  of  what  I  have  said. 

Coming  to  a  consideration  of  a  legal  remedy,  for  the  correc- 
tion of  the  trust  evil,  it  is  passing  strange,  in  the  light  of  the  his- 
tory of  monopoly  in  England  and  France,  that  an  invention  is 
to  be  sought  in  America  where  the  individual  and  the  protec- 
tion of  his  every  right  are  the  boasted  purposes  of  government. 
When  we  recall  what  English  courts,  an  English  parliament,  a 
French  statesman,  sustained  by  a  French  king,  have  done  to 
correct  and  restrain  the  evils  of  monopoly  when  concentrated 
money  capital  oppressed  the  individual;  when  we  recall  the  fact 
that  the  English  common  law  is  the  boasted  inheritance  of  the 
American  people,  there  is  awakened  a  train  of  thought  resulting 
in  conclusions  by  no  means  flattering  to  American  legislation  and 
American  courts!  As  far  back  as  the  case  of  Hurdis  in  llth 
Coke,  an  English  court,  without  republican  sympathies  or  dem- 
ocratic bias,  adjudged  in  the  case  of  a  corporate  company,  by  no 
means  so  monopolistic  as  our  Sugar  Trust,  that  the  citizen  had 
the  right  to  have  his  cloth  dressed  by  whom  he  pleased,  and  in 
that,  he  could  not  be  restrained  to  certain  persons,  "for  that  in 
effect  would  le  monopoly  and  therefore  void."  It  has  been  deter- 
mined by  a  long  list  of  our  State  courts,  and  by  the  Supreme  Court 
of  the  United  States  as  well,  that  whatever  tends  to  injustice  or 
oppression,  restraint  of  liberty,  or  trade  or  commerce,  and  natural 
or  legal  right,  when  made  the  object  of  a  contract,  is  void.  It 
has  also  been  determined  by  many  State  courts  that  all  combina- 
tions between  men  or  bodies  of  men  to  elevate  or  depress  the  mar- 
ket, or  increase  prices,  are  injurious  to  the  public  interests  and  in 
restraint  of  trade. 

Chief  Justice  Fuller,  delivering  the  opinion  of  the  Supreme 
Court  in  the  Sugar  case,  156  U.  S.  Eep.,  p.  16,  says:  "Contracts, 
combinations,  or  conspiracies  to  control  domestic  enterprise  in 
manufacture,  agriculture,  mining,  production  in  all  its  forms, 
or  to  raise  or  lower  prices  or  wages,  might  unquestionably  tend 
to  restrain  external  as  well  as  domestic  trade."  The  court  says 
on  same  page :  "All  the  authorities  agree  that  in  order  to  vitiate 
a  contract  or  combination  it  is  not  essential  that  it  should  be  a 
complete  monopoly;  it  is  sufficient  if  it  really  tends  to  that  end 
and  to  deprive  the  public  of  the  advantages  which  flow  from  free 
competition." 

In  what  precedes,  we  have  the  concession  of  the  highest  court 
in  our  Nation,  that,  if  the  facts  exist,  as  conceded  by  more  than 
69,000,000  in  a  total  of  70,000,000  of  people,  the  American  trust 

432 


is  an  illegal  thing  and  cannot  exist!  Yet  we  find  it  growing  in 
numerical  and  individual  strength,  and  oppressive  power.  How 
can  a  thing  that  is  under  the  bane  of  public  condemnation  and 
the  bane  of  the  law  as  well,  so  flourish  and  multiply?  On  the 
hustings,  inflammatory  but  conclusive  answers  could  well  be 
given — in  an  assemblage  of  this  character,  a  briefer,  and  one  sub- 
ject to  less  criticism  can  be  supplied,  and  that  answer  may  be 
thus  framed:  Great  moneyed  wealth  by  means  of  unhealthy 
economic  legislation  has  been  concentrated  in  a  few  hands,  and 
it  can,  if  allowed,  secure  greater  gains  by  means  of  the  trust  and 
combine,  than  by  investment  in  more  legitimate  enterprise ;  that 
the  Supreme  Court  of  the  United  States,  having  declared  and 
adjudged  in  the  case  just  cited,  that  there  is  no  law  existing,  and 
can  be  none  under  the  Constitution  as  it  now  stands,  to  prevent 
the  concentration  of  capital  for  the  purpose  of  having  the  few 
wealthy  exploit  the  many  not  so  fortunate,  by  means  of  the  trust 
and  combine,  those  means  of  multiplying  wealth  will  be  naturally 
resorted  to. 

Is  it  true?  On  the  2d  of  July,  1890,  Congress  passed  "An 
Act  to  Protect  Trade  and  Commerce  against  Unlawful  ^Restraints 
and  Monopolies."  That  act  was  apparently  drawn  so  as  to  pre- 
vent any  form  of  trust  or  combine  in  restraint  of  trade,  or,  that 
would  destroy  competition.  Sec.  3  of  the  Act  declares — "Every 
contract,  combination  in  form  of  trust  or  otherwise  or  conspiracy 
in  restraint  of  trade  *  *  *  is  hereby  declared  illegal,"  and 
a  severe  penalty  was  fixed  upon  any  person  who  should  make  such 
contract,  or  engage  in  such  combination. 

This  far-reaching  act  of  Congress,  as  shown  by  the  record, 
restrained  the  formation  of  trusts  and  combines  from  the  date 
of  its  passage,  and  the  addition  to  the  number  of  existing  trusts 
was  small  until  January,  1895,  when  the  Supreme  Court,  not 
without  protest  from  a  sitting  member,  judicially  declared  that 
whilst  the  act  was  not  unconstitutional,  it  was  ineffective,  and 
that  the  Congress  of  the  United  States  was  without  constitutional 
power  to  attain  the  purpose  sought.  This  was,  for  reasons 
strongly  stated  by  Justice  Harlan  in  his  dissenting  Opinion,  a 
startling  decision,  and  has  given  birth  to  the  hundreds  of  trusts 
that  now  afflict  the  American  people.  The  decision  is  one  to 
which  the  American  citizen  must  bow  in  submission,  though  with 
some  feeling  of  shame  and  humiliation,  inasmuch  as  the  court 
admits  the  trust  to  be  an  evil  thing,  and  an  unlawful  thing,  but 
a  thing  which  the  United  States  Congress  is  unable  to  deal  with 
under  our  Constitution  as  it  now  exists!  In  this  case  we  have  the 
judicial  declaration  of  our  highest  court,  that  the  United  States 

433 


government  is  not  strong  enough  to  control  the  trust  and  the 
combine,  and  will  not  have  the  strength  until  there  is  a  consti- 
tutional revision! 

The  English  Parliament  in  the  time  of  James  I.  declared: 
"That  all  monopolies  and  all  commissions,  grants,  licenses,  char- 
ters, and  letters  patent  to  any  person  or  persons,  bodies  politic 
or  corporate,  of  or  for  the  sole  buying,  selling,  working  or  using 
anything  within  the  realm  *  *  *  were  contrary  to  law  and 
utterly  void."  By  this  act  the  Englishman  was  protected  against 
the  imposition  of  the  trust  and  combine.  The  courts  before  that 
had  held  such  bodies  to  be  void  under  the  common  law  of  the 
realm,  and  that  same  common  law  is  the  basis  of  all  American 
jurisprudence,  our  Congress  of  the  united  colonies  having,  in 
1774,  declared  it  to  be  a  part  of  our  "indubitable  rights  and  lib- 
erties." But  in  the  matter  of  trusts,  our  Supreme  Court  has 
decided  that  the  people  have  no  remedy  either  by  statute  or  com- 
mon law,  and  that  all  the  remedy  they  can  hope  for  under  the 
Constitution  as  now  framed,  must  be  through  state  legislation  and 
state  courts! 

When  concentrated  wealth  and  monopoly  invaded  the  rights 
of  the  Frenchman,  that  great  French  statesman,  Turgot,  pre- 
pared an  edict  which  was  issued  by  Louis  XVI.  in  the  year  of  the 
declaration  of  American  Independence,  which  reads:  "God,  in 
creating  man  with  necessities,  has  compelled  him  to  resort  to 
labor,  and  has  made  the  right  to  labor  the  sacred  unproscriba- 
ble  right  of  man.  Therefore,  it  is  ordained  that  the  arbitrary 
institutions  which  prevent  the  indigent  from  living  by  work; 
which  extinguish  emulation  and  industry,  and  make  useless  the 
talents  of  those  who  do  not  belong  to  a  corporation  or  company; 
which  load  industry  with  burdens  onerous  to  the  subject  without 
benefit  to  the  state;  which  by  the  facility  which  they  afford  to 
the  combination  of  the  rich  to  force  the  poor  to  submit  to  their 
will,  and  to  create  conditions  that  enhance  the  price  of  the  most 
necessary  articles  of  subsistence,  be  abrogated." 

It  is  impossible  to  draw  a  more  exact  picture  of  the  American 
trust  than  that  given  by  Turgot,  and  which  the  French  king 
banished  from  his  kingdom  because  of  its  injustice  to  and  hard- 
ship upon  the  citizen!  The  American  government  is  powerless 
to  do  so  much  for  the  protection  of  the  citizen  as  the  French  king 
did  for  his  subject. 

The  decision  of  the  Supreme  Court  in  the  Knight  case,  de- 
termines that  we  must  have  a  constitutional  change  if  the  gen- 
eral government  is  to  deal  with  the  trust  problem.  This  enabling 

434 


amendment  must  be  made,  or  we  must  rely  upon  state  legislation 
for  a  remedy.  What  view  the  Supreme  Court  may  adopt  as  to 
the  constitutionality  of  any  State  legislation  that  undertakes  to 
deal  effectively  with  the  subject,  remains  to  be  seen.  There  are 
now  pending  one  or  more  cases  in  which  this  problem  may  be 
solved. 

Eecent  litigation  and  observation  leave  no  room  to  doubt  that 
the  trusts  of  the  country  have  in  operation  a  cunningly  devised 
system  of  what  can  be  termed  nothing  milder  than  corruption. 
The  head  of  one  of  the  largest  of  these  bodies  unblushinglv  ad- 
mitted before  a  recent  investigating  board  that  his  company  freely 
contributed  to  the  campaign  funds  of  Democrats  and  Republi- 
cans alike— to  Democrats  in  Democratic  States,  and  to  Republi- 
cans in  Republican  states.  This  is  one  grievous  evil  of  the  system 
working  in  a  dangerous  direction,  and  should  be  curbed  by  com- 
prehensive and  well  digested  state  legislation  that  would  prevent 
the  evil. 

Under  the  almost  undefined  and  limitless  police  power  of  the 
State,  the  states  of  the  Union  can  do  much  to  restrain  if  not 
destroy  the  oppressive  power  of  the  trust  and  the  combine. 
Under  the  general  law  the  corporation  formed  in  any  one  state 
is  a  resident  of  that  state,  while  it  has  power  to  do  business  where 
it  pleases.  "West  Virginia  and  New  Jersey,  notably,  create  cor- 
poration of  any  character  where  the  projectors  are  willing  to 
pay  the  required  fees. 

Such  corporation  can  claim  the  judicial  protection  in  any  state 
where  it  may  do  business,  but  so  far  as  its  existence  is  concerned, 
no  court  outside  of  the  State  where  it  is  created  can  affect  it.  If 
a  corporation  doing  business  in  States  other  than  where  created 
should  be  required  to  become  a  resident  of  such  other  States  for 
all  purposes,  and  on  equality  with  other  citizens  of  the  State,  as  a 
condition  precedent  to  doing  business  therein,  the  State  courts, 
governed  bv  the  principles  of  the  English  common  law,  would 
exercise  a  healthful  control  over  them.  Such  legislation  could 
be  framed  without  violation  of  the  restrictive  provisions  of  the 
Federal  Constitution,  and  would  tend  to  give  more  general  effect 
to  such  legislation  as  has  been  adopted  in  Illinois  and  other  States. 

Again,  the  taxing  power  of  the  state  is  a  large  one,  and  a  wise 
exercise  of  this  power  would  do  much  to  control  the  too  powerful 
trust,  including  the  department  store. 

Public  policy  ever  favors  fair  dealing,  enterprise,  and  free 
competition,  and  the  courts  have  declared  all  combinations  whose 
object  is  to  destroy  or  impede  free  competition  in  business  as  void. 

435 


In  such  cases  there  must  he  some  evidence  of  the  object  and 
purpose  of  the  combination.  Change  the  rules  of  evidence  so  as 
to  make  shown  the  effect  of  the  combination,  or  of  the  trust  that 
has  taken  its  place,  evidence  of  the  purpose  for  which  formed, 
and  the  trust  will  be  made  more  amenable  to  the  law,  both  in  civil 
and  criminal  proceedings. 

In  the  light  of  State  attempt  to  successfully  deal  with  the  trust 
evil  it  may  be  concluded  that  the  question  should  come  within 
the  domain  of  the  general  government,  and  to  accomplish  this 
there  must  be  one  or  more  amendments  to  the  Constitution.  The 
further  increase  in  the  number  of  monopolistic  aggregations  may 
be  easily  met  by  state  legislative  action  in  the  future;  but  it  is 
with  the  evil  that  now  exists  with  its  power  for  future  develop- 
ment without  increase  in  numbers,  that  the  people  are  called  upon 
for  decisive  action. 

It  is  argued  that  the  whole  subject  will  settle  itself  to  the 
mutual  advantage  of  capital  and  the  people  if  left  alone.  N"o  evil 
will  correct  itself  so  long  as  its  intended  purposes  are  attained  by 
growth  and  development!  There  is  no  law  of  trade  or  produc- 
tion that  will  cure  the  trust  evil  by  its  inherent  force.  One  of  the 
great  authorities  on  the  trust  subject  has  voiced  general  sentiment 
in  this  language :  "It  has  come  with  none  of  the  careful  delibera- 
tion that  usually  attends  the  investment  of  great  aggregations  of 
capital.  It  has  been  guided  by  no  precedent  experience.  It  is 
no  gradual  result  of  a  natural  evolution.  It  is  a  reversal  of  all 
that  economists  have  accepted  as  fundamental  axioms  of  trade. 
It  is  an  undeliberate  revolt  against  the  most  essential  force  in 
the  regulation  of  production,  distribution,  and  values — the 
natural  law  of  competition." 

It  being  true  that  the  trust  is  a  thing  born  in  defiance  of  law, 
no  known  law  can  cause  it  to  develop  into  a  good  thing  in  business 
that  must  be  controlled  by  natural  laws  or  legislation. 

I  admit  that  in  the  business  affairs  of  men  there  is  at  work 
a  leveling  force  which  brings  about  a  reciprocity  of  benefit  and 
a  sort  of  equality;  but  this  is  a  natural  force,  and  there  is  no 
place  for  its  operation  when  the  business  belonging  to  the  natural 
man  is  turned  over  to  the  unnatural  monopoly.  The  condition 
then  becomes  too  abnormal  for  the  application  of  natural  laws 
and  usual  forces.  And  when  we  know  that  the  abnormal  condi- 
tion has  its  birth  in  the  purpose  of  the  powerful  few  to  impose 
upon  and  oppress  the  millioned  many,  we  know,  without  close 
reading  from  cause  to  effect,  that  the  law  of  birth  will  develop 
strength  and  power  in  the  purpose  of  origin. 


If  the  trust  evil  as  it  now  exists  is  to  be  corrected,  if  the 
future  evils  that  must  ensue,  are  to  be  averted,  there  must  be 
legislation  that  can  come  from  one  source  only — and  that  is  a 
legislature,  State  and  National,  composed  of  men  who  are  truly 
American  and  above  all  undue  corporate  influence! 


E.  C.  IEWIN. 

President  National  Board  of  Fire  Underwriters. 

As  a  proper  understanding  of  this  question  involves  more  or 
less  technical  or  expert  knowledge,  possessed  only  by  those  en- 
gaged in  the  business,  it  may  be  well,  for  the  benefit  of  those 
of  other  callings,  briefly  to  explain  those  fundamental  principles 
of  underwriting  which  are  indispensable  to  a  correct  conclusion 
from  a  community  standpoint. 

It  is  perhaps  unnecessary  to  explain  that  the  "premium"  is  the 
price  paid  an  insurance  company  for  assuming  the  risk  of  fire; 
that  the  "rate"  is  the  charge  per  $100  of  insurance,  fixed  accord- 
ing to  the  construction  of  the  building,  its  occupation,  environ- 
ment and  facilities,  public  and  private,  for  extinguishing  fires; 
and  that  the  "policy"  is  the  contract,  a  unilateral  one,  written 
and  issued  by  the  insurance  company  to  the  property-owner. 

It  is  not  generally  understood  that  a  policy  of  insurance  is  not 
an  agreement  to  pay  a  stipulated  sum  by  way  of  liquidated  dam- 
ages in  the  event  of  the  destruction  by  fire  of  the  subject  insured, 
which  would  be  a  wager,  and  contrary  to  public  policy,  but  is 
simply  an  undertaking  on  the  part  of  the  insurance  company  to 
indemnify  the  owner  to  the  extent  of  his  loss  in  actual  value  dam- 
aged or  destroyed;  the  amount  of  insurance  named  in  the  policy 
and  paid  for  at  the  rate  of  premium  being  the  limit  of  claim,  and 
not  a  measure  of  it. 

The  rate  of  premium  or  price  charged  by  the  company  is  not 
based  upon  the  expectation  of  burning  of  a  particular  risk  in- 
sured, but  upon  the  number  of  risks  of  like  kind  which  would 
be  burned  or  damaged  out  of  say  a  thousand  in  any  single  year. 
At  a  rate  of  1  per  cent,  for  illustration,  a  thousand  risks,  each 
insured  for  $1,000,  would  yield  $10,000  in  premium.  If  ten 
risks  out  of  the  thousand  should  burn  in  a  year,  the  entire 
amount  of  premium  would  be  required  to  pay  the  loss.  It  is  evi- 
dent that  a  smaller  number  than  ten  must  burn,  or  a  higher  rate 
than  1  per  cent  must  be  obtained,  to  provide  for  expenses  as  well 
as  losses. 

The  proper  rates  of  premium  for  the  various  kinds  of  property 

437 


— dwellings,  churches,  schools,  stores,  and  manufactories — are 
based,  therefore,  upon  the  observed  number  of  risks  and  amount 
of  loss  in  each  class  which  burn  out  of  a  thousand  of  like  kind  in 
a  single  year.  If  the  business  of  fire  insurance  is  conducted  on 
proper  lines,  the  element  of  luck  or  chance  does  not  enter  into  it. 
While  nothing  could  be  more  uncertain  than  the  probabilities 
of  escape  from  loss  by  a  single  risk,  nothing  can  be  more  certain 
than  that  the  average  loss  in  thousands  of  risks  of  the  same 
hazard,  environment,  and  conditions  will  be  the  same  year  by 
year;  but  to  ascertain  this  average  percentage  of  loss,  a  com- 
parison of  the  experience  of  all,  or  nearly  all,  of  the  companies 
engaged  in  the  business  is  necessary,  certainly  in  the  case  of  most 
hazards,  for  the  obvious  reason  that  no  one  company  would  have 
enough  of  most  classes  on  its  books,  outside  of  such  large  classes 
as  dwelling  houses,  farm  buildings,  etc. — especially  in  single 
states — to  indicate  the  expectation  of  what  might  be  termed  the 
fire  mortality,  or  the  loss  on  any  one  class. 

This  consideration  indicates  the  twofold  mistake  of  confining 
the  business  of  an  insurance  company  to  a  single  city  or  limited 
territory,  as  it  would  deprive  the  company  of  a  sufficient  average, 
and,  therefore,  any  legislation  prohibiting  the  conference  of  com- 
panies for  comparing  their  experience  in  other  states,  in  order  to 
ascertain  an  adequate  rate,  would  be  subversive  of  the  principles 
of  insurance. »  It  might  happen  that  a  single  company  in  a  single 
state,  or,  for  that  matter,  a  single  company  throughout  the  United 
States,  would  show  a  loss  on  a  certain  class  of  hazards,  while  the 
experience  of  all  companies  put  together  would  show  a  fair  profit 
at  the  rate  obtained.  The  co-operation  of  insurance  companies 
in  order  to  ascertain  correct  rates  is,  therefore,  necessary. 

Take  the  risk  of  whisky  in  brick  warehouses,  for  example.  A 
large  company,  having  an  exceptionally  broad  general  experience, 
incurred  losses  on  this  particular  class  during  a  five-year  period 
in  the  two  states  of  Kentucky  and  Tennessee  in  excess  of  the  pre- 
miums taken.  Such  an  experience  would  seem  to  indicate  that 
the  rate  obtained  of  90  cents  per  $100  was  too  low,  whereas  the 
experience  of  all  the  companies  doing  business  in  the  two  states 
named  proved  that  it  was  sufficiently  high,  and  the  rate  was  not 
raised.  This  same  company  during  the  same  period  in  another 
section  of  the  country — the  Middle  States — lost  nothing  on  the 
same  class;  an  experience  which,  taken  alone,  would  seem  to 
indicate  that  the  rate  obtained  was  for  that  locality  too  high, 
which  was  not  a  fact,  however,  for  the  experience  of  all  the  com- 
panies doing  business  in  the  territory  showed  the  rate  had  been 
properly  fixed  and  that  the  experience  of  this  single  company 


was  simply  exceptionally  unfortunate  in  the  one  territory  and  ex- 
ceptionally profitable  in  the  other. 

The  argument  so  frequently  made  by  some  property-owners, 
that  they  have  paid  insurance  for  a  long  term  of  years  without 
collecting  a  single  loss,  and  should,  therefore,  have  a  lower  rate, 
is  based  upon  ignorance  of  the  principles  of  fire  insurance,  and 
overlooks  the  fact  that  at  a  rate  of  1  per  cent  it  would  take  nearly 
forty-one  years  for  a  sum  of  money  like  the  premium  paid  at  the 
beginning  of  each  year  to  equal  the  amount  insured  and  a  total 
loss,  compounding  the  interest  at  4  per  cent,  and  this  without 
any  allowance  for  the  expense  of  conducting  the  business.  Any- 
one can  verify  this  computation  for  himself,  and  cannot  afford  to 
be  ignorant.  It  is  best  for  the  individual  to  entrust  this  branch 
of  his  worldly  affairs  to  those  who  understand  it,  for  the  same  rea- 
son that  he  entrusts  the  erection  of  his  building  to  the  mason, 
carpenter,  and  architect.  Cannot  the  state  safely  conduct  the 
business  of  insurance  for  its  citizens? 

Theoretically,  yes;  but  practically  nothing  would  be  gained, 
the  chances  being  largely  in  favor  of  a  higher  cost  to  citizens  and 
poorer  management  than  would  result  from  the  conduct  of  the 
business  by  men  engaged  in  it  for  a  livelihood.  The  state  would 
need  the  same  executive  and  clerical  labor  as  an  insurance  com- 
pany. It  would  require  inspectors,  adjusters,  bookkeepers,  and 
men  qualified  for  the  various  branches  of  the  business  to  the  same 
extent  that  insurance  companies  would,  but  with  this  difference, 
that  they  would  too  often  be  appointed  for  political  reasons, 
rather  than  because  of  personal  qualifications  for  the  duties  to  be 
discharged.  There  is  no  more  reason  why  the  state  should  con- 
duct the  business  of  insurance  than  why  it  should  conduct  any 
other  business — that  of  groceries,  dry  goods,  or  manufacturing. 
It  is  safe  to  say  that  in  the  distribution  of  labor  in  a  community 
the  community  will  regulate  itself.  No  single  calling  can  se- 
cure an  undue  amount  of  profit  without  attracting  to  it  enough 
competitors  from  other  callings  to  keep  the  prices  at  a  proper 
level. 

What  would  have  been  the  burden  of  the  citizens  at  large  of 
the  two  states  of  Illinois  and  Massachusetts  if  they  had  been 
called  upon  to  pay  the  losses  of  their  two  cities  of  Chicago  and 
Boston  in  the  years  1871  and  1872?  Fortunately  for  them,  the 
citizens  of  the  entire  country,  almost  of  the  entire  world,  con- 
tributed, through  the  fire  insurance  companies,  to  pay  the  mil- 
lions that  were  required  for  the  purpose. 

Co-operation  in  fire  insurance  is  not  a  "trust"  in-  the  modern 
acceptation  of  the  term.  There  is  not  and  never  lias  been  any 

439 


"pooling"  in  the  business  of  insurance.  The  rates  obtained  are 
sufficient  simply  to  insure  the  payment  of  losses  and  a  moderate 
profit  on  the  capital.  No  combination,  in  any  business,  can  pos- 
sibly be  injurious  to  the  public  which  furnishes  to  the  public 
the  article  produced  at  the  lowest  price  consistent  with  fair 
return  upon  the  capital  invested  and  proper  remuneration  for 
the  labor  employed.  The  statistics  of  all  the  companies  engaged 
in  the  business  through  a  long  series  of  years  show  that  the  profits 
of  the  business  of  insurance  have  been  less  than  3  per  cent  of  the 
premiums  collected,  and  dividends  in  excess  of  that  per  cent 
made  to  stockholders  have  been  received  from  interest  returns 
on  capital  and  invested  surplus — an  increment  which  would  have 
come  to  the  owners  of  such  assets  without  plating  them  at  the  risk 
of  fire. 

The  laws  of  the  various  states  require  detailed  statements  on 
the  part  of  insurance  companies,  showing  every  item  of  income 
and  every  item  of  expense;  the  amount  of  their  premiums  re- 
ceived and  of  losses  paid.  There  is,  in  fact,  no  other  business 
whose  methods,  income,  expenses,  losses,  and  profits  are  thus  ex- 
ploited for  the  information  of  the  public.  There  are  no  trade 
secrets  in  fire  insurance.  If  the  business  is  conducted  at  un- 
necessary expense  or  with  undue  profit,  the  result  will  be  known, 
and  invite  other  companies  to  enter  into  competition,  especially 
from  foreign  countries,  and  it  is  impossible  for  any  single  com- 
pany, or  any  number  of  insurance  companies,  to  maintain  any 
form  of  monopoly. 

It  is  doubtful  if  any  mercantile  or  manufacturing  business 
could  live  if  obliged  thus  to  publish  at  the  end  of  each  year,  for 
the  information  of  competitors  and  customers,  the  fullest  details 
of  its  transactions.  Indeed,  if  the  laws  now  in  force  for  the  regu- 
lation of  the  business  of  fire  insurance — the  compulsory  publica- 
tion of  accounts,  etc. — were  applied  to  other  branches  of  busi- 
ness, manufacturing  and  mercantile,  the  present  war  against  so- 
called  "trusts"  and  combinations  in  those  branches  would  be  un- 
necessary. 

What,  then,  has  been  the  protection  of  the  business  of  fire 
insurance  that  it  has  been  able  to  survive  this  public  exhibit  of 
all  the  details  of  its  methods  and  its  exact  profits?  It  has  been 
the  fact  that  the  profit  of  the  business  has  been  so  low  as  not  to 
encourage  the  organization  of  companies.  Does  not  the  simple 
fact  that  the  public  shows  its  unwillingness  to  invest  in  insur- 
ance stocks  on  other  than  a  6  per  cent  basis  indicate  what  the 
published  figures  of  the  business  clearly  prove,  that  there  is  no 
abnormal  profit  in  it  and  that  investors  recognize  the  element 

440 


of  risk  and  have  an  apprehension  of  the  facts,  or  surely  the  stocks 
would  find  purchasers  on  a  better  basis  than  6  per  cent?  The 
stocks  of  well-managed  railroads  are  selling  to-day  on  a  4  per  cent 
basis. 

In  connection  with  this  should  be  taken  into  consideration 
that  new  companies  can  be  easily  organized.  They  have  to  ac- 
quire no  "right  of  way/  no  franchise,  or  the  construction  of  a 
valuable  building  plant ;  there  are  no  patent  rights  or  copyrights 
involved;  the  necessary  capital — and  the  law  does  not  require  a 
large  one — with  a  little  office  furniture  and  stationery,  is  all  that 
is  needed  to  launch  a  new  fire  insurance  company.  Surely  the 
written  and  unwritten  law  of  trade  and  the  rules  of  competition 
can  be  relied  upon  to  regulate  the  profits  of  such  a  business  with- 
out legislative  interference. 

As  already  stated,  the  ascertainment  of  the  average  percent- 
age of  loss,  to  be  correct,  involves  comparison  of  experience,  in 
the  interest  of-  the  property-owner  as  well  as  in  the  interest  of 
the  insurance  company,  for  an  inaccurate  estimate  would  be  as 
likely  to  be  too  high  as  too  low.  If  it  is  too  high,  the  property- 
owner  will  be  called  upon  to  pay  an  excessive  rate  of  premium; 
if  it  is  too  low,  the  company  will  lose  money;  and  as  capital  is 
simply  an  incident  of  security,  grossly  inadequate  if  the  premium 
should  prove  insufficient  for  the  risk  run,  the  property-owner 
would  not  secure  the  indemnity  he  is  paying  for.  The  total  cap- 
ital of  all  the  fire  insurance  companies,  domestic  and  foreign, 
reporting  to  the  New  York  Insurance  Department  at  the  close  of 
1898,  was  less  than  ninety  millions  ($89,476,981),  while  the 
amount  of  premiums  held  by  them  for  their  insurance  in  force 
was  one  hundred  and  two  millions  of  dollars  ($102,872,081), 
whereas,  the  losses  paid  for  the  single  year  named  were  seventy- 
one  millions  ($71,781,247),  a  sum,  it  will  be  observed,  which  was 
nearly  seven-eighths  of  the  total  capital  of  all  the  companies  en- 
gaged in  the  business. 

This  simple  computation  shows  how  important  it  is  for  the 
community  at  large  that  the  average  rate  of  premium  of  the  com- 
panies should  be  high  enough  to  pay  the  losses  and  expenses,  and 
that  it  would  not  do  to  rely  upon  the  capital  invested  as  a  security. 
State  laws  recognize  this  fact,  and  require  that  whenever  the  re- 
serves of  a  company  are  not  equal  to  its  liabilities  and  its  capital 
becomes  impaired,  the  company  must  immediately  make  its  capi- 
tal good  or  retire  from  business. 

Competition,  which  is  claimed  by  some  to  be  the  life  of  trade, 
is  the  death  of  insurance  if  it  results  in  inadequate  prices  or  rates. 
The  proper  conduct  of  the  business,  therefore,  in  the  interest  of 

441 


all  concerned,  involves  accurately  ascertained  and  equitable  rates ; 
a  cheap  price  for  insurance  always  implies  reduced  security,  or  the 
absence  of  that  which  it  is  intended  to  purchase,  and  inadequate 
rates  must  sooner  or  later  result  in  worthless  policies. 

It  should  not  require  argument  to  demonstrate  that,  since  all 
the  companies  having  policies  on  a  burned  property  must  incur 
the  same  percentage  of  loss,  and  also  the  same  percentage  of  ex- 
pense, they  should  get  the  same  rate,  and  that  the  property- 
owner  may  well  be  suspicious  of  a  company  offering  to  write  at 
a  lower  rate  than  the  majority  of  companies  are  willing  to  accept. 
The  buyer  of  merchandise,  who  secures  possession  when  he  ac- 
quires title  of  an  article  of  whose  value  he  is  a  competent  judge, 
may  felicitate  himself  on  a  good  bargain  if  he  gets  it  below  cost. 
With  the  merchandise  in  his  possession,  and  sure  of  its  value,  he 
has  no  reason  to  care  whether  the  seller  lost  money  on  it  or  not, 
but  it  is  not  so  with  insurance.  Insurance  is  not  a  "good  deliv- 
ery" until  the  policy  has  expired,  or,  in  case  of  fire,  until  the  loss 
has  been  collected;  and  he  who  secures  it  at  a  rate  below  cost 
and  flatters  himself  that  the  other  customers  of  the  company  do 
not  secure  the  same  terms,  or  overlooks  the  fact  that,  if  they  do, 
his  insurance  is  likely  to  be  worthless,  would  do  well  to  keep  his 
money  in  his  pocket  or  deposit  it  in  a  savings  bank. 

It  should  be  borne  in  mind  that  the  payment  for  a  fire  by  an 
insurance  company  simply  distributes  the  loss  of  the  individual 
upon  the  entire  community ;  it  does  not  restore  anything.  Such 
drains  upon  the  resources  of  the  country  are  to  a  large  extent  pre- 
ventable, and  intelligent  inspection  and  discriminating  rating  by 
insurance  companies  would  secure  this  end. 

Any  system  of  insurance  rating  which  does  not  discriminate 
between  safe  construction  and  unsafe  construction  and  between 
carefulness  and.  negligence,  is  an  injury  to  the  community  and  a 
gross  injustice  to  that  better  class  of  citizens  who  build  securely 
and  manage  their  affairs  prudently. 

It  may  safely  be  asserted  that  the  enormous  fire  waste  of  the 
country,  costing  at  present  at  the  rate  of  more  than  one  hundred 
and  twenty-five  million  dollars  per  annum,  or  more  than  ten  mill- 
ions a  month,  would  be  materially  increased  but  forthe  inspections 
and  suggestions  of  insurance  companies,  enforced  by  higher  rates 
charged  to  those  property-owners  who  are  careless  or  indifferent 
as  to  fire,  and  would  be  materially  decreased  if  legislative  restric- 
tions in  various  states  did  not  prohibit  the  co-operation  of  insur- 
ance companies  for  so  laudable  a  purpose  directly  in  the  interest 
of  the  community. 

It  is  as  short-sighted  to  compel  companies  to  write  at  inade- 


442 


quate  rates  as  it  would  be  to  require  savings  banks  to  pay  6  per 
cent  interest  and  invest  their  deposits  at  3  per  cent. 

Animosity  toward  corporations  grows  largely  out  of  misap- 
prehension in  regard  to  them.  The  individual  citizen  does  not 
and  should  not  lose  his  rights  by  becoming  a  member  of  a  cor- 
poration any  more  than  by  becoming  a  member  of  a  partnership 
firm.  It  is  in  the  power  of  any  citizen  to  become  a  shareholder, 
even  though  his  means  are  limited.  One  hundred  dollars  will 
buy  a  share  in  a  new  insurance  company.  He  is  thus  enabled  to 
engage  in  a  business  which  he  may  not  understand  and  to  secure 
intelligent  management  and  expert  knowledge  which  he  does  not 
himself  possess. 

Corporations  thus  enable  people  of  small  means,  by  joining 
forces  and  uniting  their  savings,  to  secure  the  same  advantages 
for  business  purposes  that  millionaire  capitalists  enjoy,  and  a  cor- 
poration thus  becomes  a  poor  man's  opportunity.  Among  the 
stockholders  of  insurance  companies,  thousands  in  number,  are 
widows  and  orphans,  who  are  thus  enabled  to  keep  their  modest 
capital  employed  and  to  have  an  active  partnership  in  commercial 
undertakings. 

It  is,  perhaps,  not  unnatural  that  property-owners,  having  in 
mind  only  the  simple  process  of  writing  a  policy  of  insurance  by 
an  agent  of  an  insurance  company  and  the  delivery  of  it  by  him  to 
the  assured  or  property-owner,  should  regard  the  expense  of  trans- 
acting the  business  as  merely  nominal.  They  overlook  the  fact 
that  a  greater  number  of  persons  of  various  qualifications  must 
be  employed  and  remunerated  before  the  policy  of  insurance  can 
be  written  and  delivered,  and  that  the  percentage  of  the  premium 
required  to  pay  the  expenses  of  the  business  (about  35  per  cent), 
is  not  greater  than  that  involved  in  the  sale  of  merchandise,  a 
piece  of  calico,  for  example,  which  includes  the  profit  to  the 
planter  who  raises  the  cotton;  to  the  compress  that  presses  it; 
to  the  commission  merchant  who  sells  it ;  to  the  common  carrier 
that  carries  it  to  the  mill ;  to  the  mill-owner  who  manufactures 
it  into  cloth,  including _his  operatives ;  to  the  dye  and  print  es- 
tablishment that  prints  it;  to  the  commission  merchant  in  the 
distributing  center  of  a  great  city  who  sells  it;  to  the  wholesale 
merchant,  who  in  turn  sells  to  the  retailer,  who  in  turn  delivers  it 
to  the  consumer.  All  of  these  processes  involve  separate  remuner- 
ations and  an  aggregate  percentage  of  expense  fully  equal  to  that 
of  the  insurance  business,  which  requires  the  agent  in  the  town, 
who  writes  and  delivers  the  policy  of  insurance ;  the  expert  who 
inspects  the  building  from  time  to  time  during  the  term  of  the 
policy;  the  rating  expert  who  fixes  the  rate,  recognizing  every 


443 


point  of  construction,  occupanc}',  and  environment;  the  adjuster 
who  must  adjust  the  losses ;  the  accountants  and  bookkeepers  in 
the  offices  of  the  company,  and,  lastly,  the  executive  officers,  who 
must  employ  all  of  these  men,  supervise  their  work,  and  attend  to 
the  investment  of  the  assets  and  reserves  of  the  company,  not 
forgetting  office  rent,  stationery,  blank  books,  printing,  postage, 
and  last,  but  not  least,  taxes — the  latter  seldom  less  than  2$  per 
cent  of  the  premium,  to  be  paid  whether  the  company  makes 
money  or  not.  So  that  it  is  doubtful  if  any  business  involves 
greater  necessary  outlay  or  requires  higher  executive  ability  or  a 
broader  education  as  to  the  methods  and  hazards  of  all  other  occu- 
pations. 

Charles  Sumner,  when  United  States  senator,  wisely  said,  "a 
tax  upon  insurance  is  a  tax  upon  a  tax,  and,  therefore,  a  bar- 
barism." As  the  insurance  company  must  collect  enough  from 
property-owners  to  pay  its  losses  and  expenses  and  yield  a  living 
profit,  it  is  clear  that  the  citizens  of  a  state,  after  all,  have  to  pay 
the  tax,  with  the  expense  of  collecting  it  added — which  is  a  farce. 
A  tax  upon  the  profits,  on  the  other  hand,  is  a  tax  upon  the  in- 
surance company,  and  one  that  it  should  pay  without  complain- 
ing. A  tax  upon  the  premium  is  a  tax  upon  the  assured  property- 
owner,  and  one  he  ought  not  to  pay.  No  insurance  company 
would  complain  of  being  taxed  2^  per  cent  on  that  portion  of  the 
premiums  taken  out  of  a  state  after  paying  the  losses  and  expenses, 
and  this  should  be  the  basis  of  taxation  everywhere. 

This  may  be  expected  to  be  55  per  cent  of  the  premium. 
The  largest  and  most  successful  companies  have  experienced  not 
less  than  this  percentage  of  loss  as  the  result  of  the  years  they 
have  been  in  business.  If  this  percentage  be  added  to  the  35  for 
expenses,  there  will  be  left  10  per  cent — 5  of  which  should  be 
accumulated,  as  already  stated,  for  sweeping  conflagrations,  and 
the  remaining  5  per  cent  will  probably  not  be  regarded  by  those 
engaged  in  any  other  business  as  an  abnormally  high  profit,  leav- 
ing out  of  consideration  the  great  risk  run  by  those  whose  capital 
is  invested. 

No  legislation  more  inimical  to  the  interests  of  the  community 
or  injurious  to  the  business  of  fire  insurance  has  been  enacted  of 
late  years  than  so-called  "Valued  Policy  Laws,"  which  require, 
in  the  event  of  the  destruction  of  a  building,  that  its  owner  shall 
receive  the  full  amount  for  which  he  has  effected  insurance  upon 
it,  even  though  it  be  more  than  the  actual  cash  value  of  the 
property  destroyed.  As  already  stated,  an  insurance  policy  is 
not  an  undertaking  to  pay  a  stipulated  sum  in  the  event  of  loss, 
but  a  contract  of  indemnity  or  protection,  so  that  when  a  prop- 


444 


erty  owner  pays,  say,  $50  for  a  $5,000  insurance  policy,  he  is  pay- 
ing $50  for  $5,000  worth  of  protection  against  loss  by  fire  for  a 
given  time — the  term  of  the  policy,  one  year,  three  years,  or  five 
years.  If  during  that  period  a  loss  occurs,  he  will  receive  the 
amount  of  the  loss,  not  exceeding  the  amount  named  as  the  limit 
of  insurance.  He  may  have  five  or  more  partial  losses  on  the 
same  property  during  the  time  for  which  the  policy  is  written 
and  receive  pay  for  each  of  them,  and  still  not  exhaust  the  whole 
amount  of  protection,  unless  the  aggregate  sums  paid  equal  the 
amount  of  limit  in  the  policy. 

-  The  standard,  legal  form  of  an  insurance  policy  contracts  to 
insure  the  property-owner  in  the  following  words : 

"Against  all  direct  loss  or  damage  by  fire  to  an  amount  not 
exceeding  five  thousand  dollars." 

Overlooking  these  unmistakable  terms,  some  property-owners 
and  legislators  infer  that  the  agreement  is  to  pay  $5,000  in  the 
event  of  the  destruction  of  the  property,  though  it  might  not  be 
worth  more  than  $1,000.  They  also  overlook  the  fact  that  the 
policy  may  be  written  for  one  year,  or,  as  is  often  the  case,  for 
five  years,  and  the  value  of  the  building,  by  age,  use,  decay,  etc., 
may  be  greatly  less  at  the  end  of  the  term  than  at  its  beginning. 
A  "valued  policy"  law  would  in  such  case  work  most  unjustly. 

The  argument  is  made  by  those  advocating  such  laws  that  in- 
surance companies  should  investigate  the  values  of  the  properties 
they  insure  if  they  do  not  wish  to  pay  for  the  full  amount  of  the 
insurance,  and  that  it  will  be  their  own  fault  if  they  are  mulcted  an 
undue  amount.  This  argument  overlooks  the  fact  that  to  properly 
ascertain  the  actual  cash  value  of  a  building  requires  a  careful  ex- 
amination by  expert  builders,  masons,  carpenters,  etc.,  who  would 
charge  for  their  services  in  many  cases — especially  in  the  case 
of  the  buildings  of  small  value  of  the  poorer  classes,  and  particu- 
larly farm  buildings  in  the  country,  which  they  would  charge 
extra  to  visit — as  much  as,  or  more  than,  the  whole  premium  paid 
for  the  insurance.  Such  expensive  expert  examinations  ought  to 
be  necessary  only  in  case  of  a  fire  to  ascertain  the  amount  of  loss, 
and,  therefore,  only  in  the  one  case  of  a  burned  property  out  of 
the  hundreds  which  do  not  burn.  A  "valued  policy"  law,  there- 
fore, works  most  oppressively  upon  the  property-owner  of  small 
holdings,  and  least  oppressively  upon  the  properties  of  larger 
value,  whose  owners  do  not,  as  a  rule,  obtain  an  undue  amount  of 
insurance,  and  the  requirement  entails  that  the  same  labor  and 
expense  shall  be  incurred  as  to  each  of  hundreds  of  risks  to  pre- 
vent the  single  property-owner  who  may  have  a  loss  from  collect- 
ing more  than  he  is  entitled  to  receive. 

445 


The  argument  in  favor  of  valued  policy  laws  also  overlooks 
the  obvious  fact  that  an  honest  claimant  is  sure  to  receive  the  full 
amount  of  his  loss  in  any  event,  since  no  intelligently  managed 
insurance  company  would  be  so  short-sighted  as  to  refuse  to  pay 
an  honest  claim,  realizing  that,  in  case  it  should,  it  would  be 
forced  to  do  so  at  law,  for  courts  and  juries  never  sympathize 
with  corporations,  but  always  with  the  individual.  Moreover, 
all  insurance  policies  contain  a  clause  which  provides  that  in  case 
of  differences  between  the  owner  and  the  insurance  company,  the 
matter  in  dispute  shall  be  left  to  disinterested  appraisers,  chosen 
by  each,  who  in  turn  shall  select  a  third  as  umpire.  A  man  is 
thus  entitled  to  have  for  his  appraiser  any  neighbor  in  whom  he 
trusts.  It  would  with  this  provision  be  impossible  for  an  insur- 
ance company  under  its  policy  to  escape  paying  all  to  which  any 
claimant  is  entitled.  Insurance  companies  are  not  litigious ;  they 
cannot  afford  to  go  into  courts  excer>t  with  clean  hands  and  with 
claims  of  unmistakable  justice.  The  statements  cf  the  companies 
reporting  to  the  New  York  Insurance  Department  show  that  a 
sum  less  than  2  per  cent  of  the  amount  of  losses  paid  by  them 
during  the  past  year  was  in  suit  at  its  close,  and  as  those  losses 
in  suit  were  the  result  of  an  average  of  at  least  three  years'  busi- 
ness, it  follows  that  the  losses  contested  by  companies  are  less 
than  1  per  cent  of  the  whole  amount  of  the  losses  incurred. 
When  it  is  remembered  how  many  fraudulent  claims  are  made 
upon  insurance  companies,  it  becomes  a  serious  question,  not 
whether  too  many  claims  are  contested  by  them,  but  whether 
enough  are  resisted  to  protect  the  interests  and  insure  the  security 
of  their  more  honest  claimants. 

The  man  who  insures  his  building  knows  better  than  anyone 
else  what  it  is  worth ;  he  is  not  oblisred  to  pay  for  more  insurance 
than  would  protect  him  for  its  full  value.  If  he  does,  he  con- 
templates a  fraud  upon  the  insurance  company,  and  should  not 
be  assisted  in  consummating  it  by  the  operation  of  law  on  the  plea 
that  he  should  receive  the  full  amount  of  the  limit  named  in  the 
policy  simply  because  he  voluntarily  paid  for  more  than  he  knew 
was  necessary  to  protect  him  against  honest  loss.  A  valued 
policy  law  is  in  reality  a  premium  upon  fraud  and  an  incentive 
to  incendiarism  or  burning  for  gain,  imposing  unnecessary  bur- 
dens upon  honest  citizens,  who  must  be  taxed  in  higher  rates  of 
premium  to  pay  for  the  exaggerated  claims  of  an  unprincipled 
few.  ;  ** 

Few  persons  realize  to  what  importance  insurance  has  grown 
as  a  factor  in  the  commercial  world.  It  is  to-day  the  security 
on  which  most  enterprises  rest,  without  which  their  projectors 


446 


would  hesitate  to  engage  in  them.  The  lender  could  not  afford 
to  trust  the  borrower  if  the  ability  of  the  latter  to  pay  the  debt 
was  liable  to  be  cancelled  by  a  fire.  Tbs  last  census  report  showed 
that  the  real  estate  mortgage  loans  of  the  United  States  amounted 
to  more  than  six  thousand  million  dollars  ($6,019,679,985.)  Of 
this  enormous  sum  the  citizens  of  Illinois  alone  had  borrowed 
three  hundred  and  eighty-four  millions;  Massachusetts  three 
hundred  and  twenty-three  millions;  New  York  sixteen  hundred 
and  seven  millions;  Pennsylvania  six  hundred  and  thirteen  mill- 
ions. It  is  safe  to  say  that  all  of  these  loans  are  based  upon  in- 
surance policies  held  as  collateral  security.  Can  anyone  estimate 
the  consequences  if  these  mortgages  should  be  called  in  by  the 
lenders,  deprived  of  their  insurance  collateral  and  unwilling  to 
trust  their  money  to  the  contingencies  of  fire!  Can  anyone  doubt 
that  such  action  would  be  taken  if  fire  insurance  capital  should 
be  withdrawn  from  a  business  made  unprofitable  by  the  burdens 
which  mistaken  legislation  is  increasing  year  by  year! 

There  is  probably  to-day  not  an  enterprise  in  the  business 
world  which  does  not  depend  upon  the  security  of  fire  insur- 
ance. It  protects  alike  the  dwelling  of  the  laborer  and  the  palace 
of  the  millionaire;  the  business  of  the  retail  dealer  and  the  aggre- 
gated values  of  the  largest  manufacturers.  Without  the  assur- 
ance which  its  protection  affords  it  is  doubtful  if  the  enterprise 
of  those  possessing  capital  would  be  exerted  sufficiently  to  give 
employment  to  the  wage-earner  or  to  keep  the  wheels  of  trade 
and  manufacture  in  motion.  Commerce  would  be  paralyzed, 
for  credit  would  be  withheld  where  confidence  would  be  wanting 
in  the  ability  of  the  purchaser  to  pay.  It  is  the  handmaid  of  com- 
merce and  the  guardian  of  industry.  Ventures  are  made  without 
hesitation  which  would  appall  those  embarking  in  them  if  liable 
to  miscarry  through  a  single  fire ;  large  values  are  boldly  collected 
to  meet  the  requirements  of  commerce  where  an  accidental  con- 
flagration might  destroy  them  in  a  night,  merchants  sell  their 
goods  on  extended  credits,  knowing  that  although  the  misfortune 
of  fire  may  overtake  the  purchaser,  his  insurance  indemnity  will 
enable  him  to  pay  for  them  not  less  readily  than  before;  vast 
industries  giving  employment  to  thousands  of  operatives  and 
supporting  whole  towns  by  their  enterprise,  testify  not  more  to 
the  courage  of  their  projectors  than  to  the  confidence  they  repose 
in  the  protection  which  insurance  gives  to  their  undertakings; 
and,  to-day,  insurance  is  as  certainly  a  necessity  of  commerce 
and  manufacture  as  is  the  railroad  or  telegraph  or  steam  power 
itself;  it  is  as  essential  to  the  commercial  system  of  the  world 
as  the  woof  thread  to  the  fabric  of  the  loom. 

447 


Probably  no  more  eloquent  tribute  to  the  spirit  of  insurance 
is  to  be  found  than  the  utterance  of  the  French  jurists,  at  the 
close  of  their  report  to  the  council  of  state,  on  the  subject  in  the 
code  of  commerce : 

"Insurance  may  justly  be  deemed  one  of  the  noblest  crea- 
tions of  human  genius.  From  a  lofty  height  it  surveys  and  pro- 
tects the  commerce  of  the  world.  It  scans  the  heavens;  it  consults 
the  seasons ;  it  interrogates  the  ocean,  and,  regardless  of  its  terrors 
or  caprice,  defines  its  perils  and  circumscribes  its  storms.  It  ex- 
tends its  cares  to  every  part  of  the  habitable  globe,  studies  the 
usage  of  every  nation,  explores  every  coast,  and  sounds  every  har- 
bor. 

"To  the  science  of  politics  it  directs  a  sleepless  attention;  it 
enters  the  council  of  monarchs,  watches  the  deliberation  of  states- 
men, weighs  their  motives,  and  penetrates  their  designs.  Found- 
ing on  these  vast  materials  its  skillful  calculations,  secure  of  the 
result,  it  then  addresses  the  hesitating  merchant:  'Dismiss  your 
anxiety  and  fear;  there  are  misfortunes  that  humanity  may  de- 
plore but  cannot  prevent  or  alleviate.  Such  are  not  the  disasters 
you  dread  to  encounter.  Trust  in  me,  and  they  shall  not  reach 
you.  Summon  all  your  resources,  put  forth  all  your  skill,  and 
with  unfaltering  courage  pursue  your  adventures.  Succeed,  and 
your  riches  are  enlarged;  fail,  and  they  shall  not  be  diminished. 
My  wealth  shall  supply  your  loss.  Rely  on  me,  and  for  your 
sake,  at  my  bidding,  the  arm  of  your  enemies  shall  be  paralyzed, 
and  the  dangers  of  the  ocean  or  the  flaming  pile  cease  to  exist.' 
The  merchant  listens  and  obeys,  and  is  rewarded.  Thousands, 
tempted  by  his  success,  follow  his  example.  Those  whom  it  had 
long  separated,  the  ocean  now  unites.  The  quarters  of  the  world 
approach  each  other  and  are  bound  by  the  permanent  ties  of 
mutual  interest  and  mutual  benefit." 

We  trust  we  have  explained  the  relation  of  insurance  to  the 
community  in  such  manner  as  to  secure  a  negative  to  this  im- 
portant question.  We  trust  we  have  established  as  facts : 

First — That  fire  insurance  is  a  commercial  and  community 
necessity. 

Second — That  a  policy  of  fire  insurance  is  a  contract  of  in- 
demnity; and 

Third — That  the  reliability  of  the  indemnity  depends  upon 
the  sufficiency  of  the  rate  of  premium,  because 

1.  State  laws  properly  require  that  if  the  capital  is  impaired 
it  must  be  made  good,  or  the  company  must  cease  doing  business. 
If  companies  cannot  pay  their  losses  and  expenses  and  secure  a 
fair  profit  return  on  the  capital  adventured  they  will  neither  be 

448 


organized  nor  continue  in  business  if  already  organized;  there- 
fore, capital  is  only  an  incident  of  the  business  and  an  adequate 
rate  is  indispensable. 

2.  Adequate  and  equitable  rates  are  necessary  for  the  protec- 
tion of  the  policy-holder  as  well  as  for  the  protection  of  the  stock- 
holder.    Otherwise  the  burden  of  insurance  will  be  unequally 
distributed  and  one  man's  property  will  be  protected,  if  insured 
below  a  proper  rate,  at  the  expense  of  another.    Insurance  capital 
must  and  should  have  a  fair  return  for  the  risk  run — a  law  of 
community. 

3.  As  inspection  and  supervision  necessary  for  the  ascertain- 
ment of  correct  rates  can  be  as  cheaply  performed  for  one  hun- 
dred companies  insuring  a  single  building  or  risk  as  for  any  one 
of  them,  co-operation  is  advisable  to  reduce  the  expense  per- 
centage.   At  the  same  time  it  would  reduce  the  loss  percentage 
by  securing  correction  of  faults  which  would  cause  fires  and  by 
encouraging  proper  construction  which  would  tend  to  prevent 
their  spread,  and  so  result  in  cheaper  insurance  to  property-own- 
ers.   In  this  view,  co-operation  of  insurance  companies  is  directly 
in  the  interest  of  the  community  and  should  be  encouraged  and 
not  prohibited.    Laws  which  prevent  companies  from  co-operat- 
ing in  this  way,  and  compel  each  company  to  inspect  each  build- 
ing for  itself,  must  increase  the  expenses  of  transacting  the  busi- 
ness and  result  in  unnecessarily  higher  rates  of  premium. 

4.  As  the  labor  required  to  ascertain  and  fix  proper  and 
equitable  rates  for  a  building  and  its  contents  can  be  performed 
by  the  same  expert  in  the  same  time  for  one  hundred  companies 
who  insure  it  as  for  any  one  of  them,  co-operation  to  ascertain 
and  fix  rates  would  result  in  a  saving  of  this  expense  also,  and  so 
further  cheapen  the  cost  of  insurance  to  the  property-owner  and 
be  directly  in  the  interest  of  the  public. 

5.  As  rates  of  insurance  are  based  upon  the  experience  of  the 
companies  through  terms  of  years  on  the  various  classes  of  haz- 
ards, most  of  which  are  so  few  in  number  that  there  would  not 
be  enough  of  a  class  in  a  single  state  to  determine  the  experience 
cost  of  insuring  them,  the  statistics  of  experience  should  be  col- 
lated from  the  whole  country,  in  justice  to  the  owners  of  such 
risks,  and  not  based  upon  the  abnormal  loss  rate  of  a  small  class 
in  a  single  state,  which  would  indicate  the  necessity  for  an  exorbi- 
tant rate  on  the  class  in  such  state,  when  in  fact  it  might  not  be 
necessary. 

6.  The  burden  of  insurance  rates  should  be  graded  according 
to  the  percentage  of  insurance  carried  to  value,  just  as  municipal 
and  state  taxes  are  based  upon  uniform  assessments  of  the  same 

449 


percentage  of  value,  and  the  property-owner  who  insures  a  proper 
percentage  of  his  value  is  entitled  to  a  lower  rate  than-  one  who 
insures  a  small  percentage  on  the  same  principle  that  wholesale 
prices  should  be  lower  than  retail  prices.  Otherwise  one  class  of 
citizens  would  be  securing  insurance  at  a  lower  cost  than  an- 
other. Co-operation  of  companies,  therefore,  is  necessary  to  pro- 
vide for  this  in  percentage  co-insurance  clauses  in  all  policies. 

It  follows,  therefore,  since  co-operation  is  necessary 

To  ascertain  cost; 

To  ascertain  and  secure  adequate  rates  for  indemnity; 

To  prevent  fires  and  thus  cheapen  the  cost  of  insurance; 

To  divide  and  lessen  expense  and  so  to  further  cheapen  the 
cost  of  insurance ; 

To  secure  that  the  same  percentage  of  insurance  should  be 
carried  by  all  owners  or  a  difference  in  rate  made — the  principle 
of  co-insurance  or  average  which  has  always  been  a  feature  of 
marine  insurance; 

That  the  conference  of  companies  and  co-operation  must  be 
in  the  interest  not  only  of  the  insurance  companies  themselves, 
but  of  their  customers,  the  insuring  public. 

Insurance  is,  therefore,  not  a  "trust,"  in  the  modern  and 
ordinary  acceptation  of  the  term,  by  which  is  meant  a  combina- 
tion of  those  engaged  in  a  particular  business  to  extort  improper 
prices  from  their  fellow-members  of  the  community  and  so  to 
obtain  an  undue  share  of  community  benefit.  The  ease  with 
which  any  number  of  citizens  can  organize  an  insurance  com- 
pany will  always  prevent  a  monopoly  of  the  business,  and  those 
engaged  in  it  can  always  be  relied  upon,  in  their  own  interests, 
to  regulate  their  prices  with  reference  to  this  important  fact. 
Exorbitant  rates  and  abnormal  profits  always  attract  competition, 
which  results  in  inadequate  rates,  and  those  engaged  in  the  busi- 
ness thoroughly  understand  this.  Managed  on  true  underwriting 
lines,  an  insurance  company  is  simply  a  great  machine  for  distrib- 
uting the  burden  of  the  fire  loss  of  the  individual  citizen  among 
his  neighbors  throughout  the  entire  country,  so  that  the  burden 
of  helping  one  who  is  unfortunate  will  be  lightly  felt-  by  all.  It 
is  the  truest  and  most  sensible  method  of  carrying  out  the  scrip- 
tural injunction,  and  it  is  amenable  to  the  laws  of  trade  which 
automatically  regulate  the  profits  of  all  commercial  enterprises 
so  that  no  one  class  of  citizens  can  long  retain  any  undue  advan- 
tage of  their  neighbors  or  any  improper  share  of  the  community 
wealth. 


450 


EVENING  SESSION,   SEPTEMBER   15. 

With  W.  Bourke  Cockran  and  William  Jennings  Bryan  an- 
nounced as  speakers  of  the  evening,  the  conference  on  trusts 
was  the  one  event  of  importance  in  the  city  of  Chicago  Friday 
evening.  The  afternoon  session  had  not  adjourned  hefore  the 
doors  were  besieged  by  ticket  holders  anxious  to  secure  their 
places  for  the  evening.  By  7  o'clock  State  street  was  packed  with 
a  struggling  crowd  working  toward  the  doors  of  the  hall  where 
the  conference  was  to  convene  an  hour  later,  and  when  Chairman 
Howe's  gavel  fell  at  8  o'clock  the  auditorium  was  packed  from  the 
parquette  to  the  outside  edge  of  the  upper  gallery  and  there  were 
ten  thousand  people  clamoring  in  the  street  for  admission.  The 
boxes  were  filled  with  a  brilliant  audience  of  society  people,  and 
the  delegates  made  way  in  their  seats  for  scores  of  gaily  dressed 
women,  while  the  aisles  were  utilized  to  accommodate  as  much  of 
the  overflow  as  possible.  Altogether  the  audience  was  as  bril- 
liant and  intellectual  a  gathering  as  ever  assembled  in  Chicago, 
and  bore  testimony  to  the  interest  of  all  classes  in  the  question 
under  debate. 

While  the  audience  expected  to  hear  both  Mr.  Bryan  and  Mr. 
Cockran  speak,  the  program  was  changed  after  the  arrival  of  Mr. 
Bryan  that  afternoon,  and  he  was  assigned  Saturday  morning. 

In  spite  of  the  crowd  and  the  trouble  of  seating  it,  there  was 
no  delay  in  opening  the  evening  session,  and  the  chairman  intro- 
duced William  Dudley  Foulke,  of  Indiana,  who  spoke  on  "The 
Problem  of  Trusts  and  Some  Proposed  Eemedies." 

WILLIAM  DUDLEY  FOULKE. 

I  confess  I  have  not  yet  been  able  to  see  my  way  clearly 
through  the  whole  labyrinth  of  complicated  questions  which  arise 
in  connection  with  this  problem  of  the  trusts.  Nay, more,  I  believe 
that  if  anyone  to-day  thinks  "he  knows  it  all" — that  he  has  found 
a  complete  remedy  for  every  evil  involved — he  will  learn  that  he 
is  mistaken ;  and  if  he  could  awaken  sometime  far  into  the  next 
century  and  look  upon  the  great  transformation  wrought  by  the 

451 


mighty  agencies  that  are  being  organized  at  the  present  time, 
he  would  perhaps  he  as  much  surprised  as  if  he  had  arisen  in 
paradise  and  found  that  the  gates  were  not  of  pearl,  and  the 
streets  were  not  of  gold,  and  that  the  angels  were  playing  upon 
instruments  with  which  he  was  wholly  unacquainted. 

The  question  we  are  called  to  consider  dwarfs  in  importance 
all  other  issues  now  before  the  country  or  the  world.  When 
Dreyfus  shall  have  been  forgotten,  when  the  war  in  the  Philip- 
pines shall  be  regarded  only  as  one  of  the  episodes  of  history, 
when  men  shall  speak  no  longer  of  the  tariff  or  the  currency,  the 
present  era  may  well  be  remembered  by  coming  generations  as 
the  epoch  of  that  great  organic  change  when  the  system  of  com- 
petition began  to  give  way  to  the  system  of  co-operation — a 
change  leading  inevitably  (whether  for  good  or  ill  we  cannot 
clearly  see)  to  the  radical  reconstruction  of  the  world's  industrial 
and  social  life. 

The  organizers  of  the  trusts,  in  their  eagerness  to  put  a  stop 
to  wasteful  and  ruinous  competition,  have  been  rushing  in  head- 
long haste  to  realize  the  immediate,  personal  benefits  of  increased 
economy  and  power  offered  by  these  great  unions,  with  little 
regard  to  ultimate  consequences.  Their  thought  has  been,  "After 
us  the  deluge." 

On  the  other  hand,  those  who  have  been  thrown  out  of  em- 
ployment or  ruined  by  the  suppression  of  competition,  together 
with  that  vast  conservative  element  in  our  population  which  fears 
a  leap  into  the  dark,  are  lifting  their  voices  in  warning,  and  some, 
it  may  be  added,  in  rather  indiscriminate  abuse. 

Let  us  consider  first  the  competitive  system  which  seems  to 
be  diminishing  in  importance  in  our  industrial  life,  and  next 
the  co-operative  methods  which  are  so  largely  taking  its  place. 
First,  what  has  competition  done  for  the  world? 

It  has  been,  perhaps,  the  most  prominent  factor  of  our  indus- 
trial progress.  Competition  between  buyers  has  enhanced  the 
price  to  the  producer.  Competition  between  sellers  has  stimu- 
lated improvements  in  the  quality  of  the  product,  has  quickened 
invention  and  skill,  has  reduced  the  cost  to  the  consumers  and 
multiplied  their  number,  and  thus  stimulated  production  to  sup- 
ply the  enlarged  demand.  It  has  increased  the  employment  of 
labor,  enhanced  the  wages  of  the  workmen,  and  improved  the 
condition  of  the  laboring  classes. 

But  competition,  although  immensely  valuable  and  necessary 
as  a  phase  in  industrial  development,  has  certain  grave  disad- 
vantages. Essentially  based  as  it  is  upon  the  principles  of  self- 
interest,  it  promotes  the  development  of  selfish  characteristics  of 

452 


skill  and  energy,  indeed,  but  often  also  of  heartlessness  and 
indifference  to  the  welfare  of  others.  It  is  part  of  the  great 
struggle  for  existence.  It  follows  the  law  of  organic  life — the 
survival  of  the  sharp  eye,  the  swift  wing  and  the  keen  talon  and 
the  merciless  beak.  And  it  has  resulted  just  as  natural  evolution 
results,  in  the  destruction  of  lower  and  feebler  forms  of  existence 
and  in  the  survival  of  those  only  who  are  best  fitted  to  carry  on 
the  work  of  the  world.  But  this  has  been  accomplished,  like  the 
development  of  organic  life,  at  immense  waste  and  sacrifice. 
Thousands  of  smaller  creatures  have  perishe'd  to  make  the  food 
of  one.  A  far  greater  effort  than  that  which  is  required  for  pro- 
duction itself  is  often  expended  in  the  mere  fight  for  a  market. 

Each  year  the  struggle  has  grown  more  intense.  By  steam 
and  telegraph  distant  points  became  united,  and  the  industry 
which  originally  feared  no  competitor  outside  the  limits  of  its 
own  town  was  perhaps  overthrown  by  some  rival  in  &  distant  part 
of  our  country,  or  even  beyond  the  seas.  The  margin  of  profit 
became  smaller,  the  outlay  for  putting  goods  on  the  market  con- 
stantly increased,  vast  sums  were  spent  in  'advertising  or  paid 
to  commercial  agents  and  travelers,  or  consumed  in  the  useless 
reduplication  of  plants  and  of  expenses  of  administration,  all  of 
which  could  be  saved  under  a  more  perfect  system.  The  very 
thing  to  be  developed  by  competition — cheap  production — was 
in  a  measure  defeated  by  the  struggle  which  competition  re- 
quired. The  only  remedy  then  was  for  industries  engaged  in  the 
same  branches  of  business  to  unite  so  as  to  reduce  the  cost  of 
production,  if  not  also  to  increase  or  maintain  the  price  of  the 
product.  The  law  whicji  led  to  this  is  as  much  a  natural  law  as 
that  which  brought  about  the  competitive  system  itself. 

But  there  are  evils  incident  to  these  combinations  which  may 
outweigh  their  advantages.  When  the  aggregations  of  capital 
become  very  great,  when  competition  is  virtually  suppressed,  and 
when  the  combination  becomes  practically  a  monopoly,  it  may 
exercise  its  powers  to  the  injury,  not  only  of  competitors,  but  of 
the  public.  It  may  dictate  terms  to  the  world.  Whenever  there 
is  only  a  single  buyer  of  the  same  material,  he  dictates  the  price 
to  the  producer.  Wherever  there  is  a  single  seller  of  the  finished 
article  he  makes  his  own  price  with  the  consumer,  perhaps  an 
exorbitant  one,  and  diminishes  thereby  the  numbers  of  con- 
sumers and  thus  restricts  production  and  curtails  the  employ- 
ment of  labor  and  the  wages  paid  for  it. 

In  practical  experience,  the  actual  economic  evils  are  indeed 
less  than  are  generally  supposed,  far  less  indeed  than  those  which 
are  theoretically  possible.  In  point  of  fact  monopolies  do  not 

453 


often  increase  the  cost  of  the  product  very  greatly,  since  if  they 
do  this  they  will  curtail  the  consumption  of  their  goods  too  much, 
or  their  extravagant  profits  might  often  induce  new  competitors 
to  enter  the  field.  The  monopolies  which  are  under  the  wisest 
management  have  therefore  kept  prices  at  figures  which  are  not 
unreasonable,  and  they  often  show,  as  in  the  case  of  the  Standard 
Oil  Company,  and  the  Sugar  Trust,  that  there  has  heen  an  actual 
decrease  both  in  the  price  of  the  product  and  in  the  cost  of  the 
manufacture.  But  there  is  reason  to  doubt  whether  this  dimin- 
ished cost  is  due  to  monopoly,  or  is  indeed  anything  like  as  great 
as  it  would  be  under  a  free  system  of  competition  with  the  im- 
proved methods  which  the  progress  of  civilization  continually 
introduces. 

Therefore,  while  the  monopoly  may  pay  somewhat  less  for  the 
raw  material  and  may  charge  somewhat  more  for  the  product  than 
would  be  possible  under  competition,  this  evil  is  by  no  means  the 
greatest  which  is  involved.  The  restriction  of  the  output  and  the 
displacement  of  labor  by  these  new  organizations  also  occurs,  but 
this  is  not  an  unmixed  evil  when  their  greater  economy  is  con- 
sidered. It  is  of  much  the  same  character  as  that  which  follows 
the  introduction  of  labor-saving  machines  and  of  labor-saving 
organizations  of  industry  everywhere. 

Indeed,  monopoly  may  often  be  of  advantage  to  labor  organ- 
izations. Under  the  present  system  a  demand  for  increased 
wages  may  fail,  or  wages  may  be  reduced  because  the  employer 
cannot  afford  to  pay  them  without  destroying  his  business,  and 
depriving  himself  of  the  power  to  meet  his  competitors  on  equal 
terms.  To  pay  the  higher  rate  of  wages  he  must  carry  on  his 
business  at  a  loss,  hence  he  suffers  his  plant  to  lie  idle. 

But  a  monopoly  can  always  afford  to  pay  the  increased  wages. 
It  can  always  recoup  itself  by  increasing  the  prices  of  its  product. 
So  the  only  question  to  be  considered  is  whether  labor  of  the 
same  kind  can  be  procured  on  better  terms  elsewhere.  The 
workmen  skilled  in  certain  branches  of  industry  are  often  limited 
in  number,  and  under  proper  organization  such  workmen  are 
likely  to  receive  a  continually  larger  proportionate  share  of  the 
product. 

But  the  political  and  social  effects  of  monopoly  are  far  more 
menacing  to  society  than  its  economic  results.  The  great  con- 
solidations of  capital  are  fast  seizing  the  avenues  of  power  that 
lead  to  the  control  of  the  government,  and  are  seeking  to  rule 
the  states  and  the  nation,  often  through  procured  legislatures 
and  corrupted  officials. 

Yet  the  monopolies  are  here.    A  great  part  of  our  manuf  actur- 

454 


ing  industries  and  a  considerable  fraction  of  our  commercial 
business  is  already  in  their  hands. 

When  the  Sugar  Trust  controlled  98  per  cent  of  the  produc- 
tion of  the  country  it  was  idle  to  say  that  the  remaining  2  per 
cent  could  offer  any  substantial  competition.  And  the  present 
tendency  is  for  all  these  great  organizations  to  draw  closer  and 
closer  to  the  ideal  of  a  perfect  monopoly,  though  none  of  them 
has  yet  entirely  reached  it. 

If  this  present  tendency  remains  unchecked,  it  is  easy  to  see 
that  each  of  the  important  branches  of  manufacture  will  be  con- 
trolled by  a  single  company,  and  the  people  naturally  look  for- 
ward with  alarm  to  the  time  when  in  each  branch  of  industry  a 
single  monopoly  shall  control  the  trade. 

Nay,  the  combining  and  recombining  will  not  stop  even  here. 
A  single  company  is  likely  to  control  many  branches  of  industry. 
The  department  store  already  absorbs  nearly  all  the  branches  of 
retail  trade.  The  great  anthracite  coal  fields  are  practically  under 
the  control  of  two  or  three  railway  companies,  and  it  is  impossible 
to  say  that  even  the  wheat  fields  of  the  Northwest,  or  the  cotton 
fields  of  the  South  may  not  in  the  future  share  the  same  fate. 
The  railroads  indeed  have  undertaken  many  other  branches  of 
industry  as  feeders  for  their  great  lines.  The  summer  hotel 
business  seems  to  be  passing  largely  into  their  hands,  as  well  as 
much  of  the  grain  elevator  business,  the  shipping  and  other 
agencies  of  transportation.  Who  can  say  indeed  what  branch 
of  industry  may  not  be  the  feeder  for  a  railway? 

As  the  great  nations  of  the  globe  are  becoming  fewer  and 
fewer  until  now  there  are  four  or  five  at  most  which  control  the 
future  destinies  of  mankind,  so  the  tendency  of  industrial  organ- 
izations to  aggregate  is  such  that  I  can  see  in  fancy  four  or  five 
great  companies  which  shall  control  practically  the  whole  output 
of  the  country. 

Nay,  since  all  industries  are  now  indissolubly  united,  who 
can  say  (if  the  present  movement  should  go  on  unchecked)  that 
a  single  gigantic  organization  may  not  sometime  control  all  pro- 
duction? 

This  will  be  a  form  of  socialism,  and  yet  it  may  not  be  at  all 
the  socialism  which  fancy  pictures  in  the  dreams  of  the  disin- 
herited. 

Socialism  may  take  many  forms.  The  industrial  organiza- 
tion of  society  may  be  for  a  time  separated  from  its  political  or- 
ganization, but  not  permanently.  Socialism  does  not  necessarily 
mean  equal  shares  to  all  in  the  joint  property,  or  returns.  These 
may  be  divided  according  to  the  services  rendered  or  capital  con- 

455 


tributed  either  by  the  actual  stockholders  or  their  predecessors  in 
title,  just  as  private  property  to-day  consists  of  that  which  a  man 
earns  and  acquires  as  well  as  that  which  has  come  to  him  by  gift 
or  inheritance.  It  is,  however,  clear  that  the  mass  of  the  people 
must  have  a  sufficient  interest  in  the  co-operative  commonwealth 
to  give  the  structure  a  broad  base  and  prevent  its  toppling  over. 
That  it  should  remain  in  possession  and  control  of  only  a  few 
millionaires  would  not  long  be  tolerated.  And  yet  equality 
might  be  found  as  impossible  in  a  co-operative  state  as  under  the 
competitive  system.  So  long  as  men  are  unequal  in  skill,  indus- 
try and  ability,  the  greatest  prizes  will  always  be  won  by  com- 
paratively few. 

Most  of  us  would  look  with  great  apprehension  upon  such 
a  radical  change  in  the  social  order,  although  we  cannot  fail  to 
see  that  many  ste,ps  toward  this  change  have  already  been  taken. 
Our  chief  apprehension  comes  from  two  sources: 

First,  we  realize  how  inadequate  are  our  government  agencies 
even  for  the  smaller  problems  which  confront  us  in  city,  state, 
and  national  administration.  How  utterly  impotent  then  will 
they  be  for  the  management  of  our  whole  industrial  life ! 

But  perhaps  one  of  the  reasons  why  they  are  so  inefficient 
at  present  is  owing  to  the  very  fact  that  they  are  not  important 
enough.  The  great  prizes  which  the  world  offers  to-day  are  gen- 
erally to  be  found  in  industrial  life,  and  our  best  and  ablest  men 
will  therefore  not  devote  themselves  to  politics.  But  if  the  power 
of  the  commonwealth  embraces  all  things,  if  it  becomes  the  only 
agency  through  which  men  can  reach  success,  our  best  life  must 
inevitably  flow  thither. 

But  the  second  great  objection  to  the  socialistic  form  of  gov- 
ernment resides  in  the  fact  that  men  believe  that  it  will  be  de- 
structive of  individual  independence,  that  it  will  take  away  a 
great  part  of  the  incentive  to  exertion,  that  it  will  be  fatal  to  the 
development  of  character  by  making  each  individual,  in  the 
words  of  Governor  Pingree,  only  a  single  cog  or  rivet  or  bar  in 
the  great  machinery  of  the  state,  rather  than  an  independent 
being  with  aims  and  interests  of  his  own.  Has  this  not  already 
been  the  effect  upon  the  great  masses  of  workmen  in  many  of  the 
vast  industries  heretofore  established?  Each  laborer  has  become 
the  producer  of  an  infinitesimal  part  of  some  great  product.  He 
has  been  turned  from  a  man  into  an  automaton.  Will  not  this  be 
the  case  in  a  much  greater  degree  when  all  society  is  organized 
for  the  development  of  a  common  industry?  But  I  am  advancing 
further  into  the  future  than  is  permitted  to  human  foresight. 
Of  one  thing,  however,  we  may  be  sure,  that  the  present  tendency 

456 


-'A* 


HENRY  WHITE 
W.  P.  POTTER 
A.  E.  ROGERS 


JOHN  I.  YELLOTT 
JOHN  W.  SPENCER 
F.  E.  HALEY 


toward  the  combination  of  capital,  if  it  be  not  arrested  somewhere 
in  its  course  either  by  natural  law  or  by  artificial  means,  will  lead 
in  the  end  to  some  form  of  socialism. 

But  is  the  present  tendency  to  continue  indefinitely?  Will 
the  operation  of  this  law  be  like  that  of  the  law  of  gravitation, 
which  has  condensed  the  vast  nebulous  mass  of  the  solar  system 
into  one  great  central  orb,  with  a  few  planets  and  their  satellites? 
Or  will  it  be  like  the  motion  of  the  pendulum,  like  the  current  of 
the  waters  to  the  sea,  coming  always  back  to  their  source?  Will 
we  return  again  to  the  competitive  system,  or  even  to  the  indus- 
trial periods  which  have  preceded  it? 

Many  of  our  prof  oundest  thinkers  believe  that  our  present 
industrial  development  will  take  care  of  itself.  Following  the 
analogies  of  organic  life,  they  say  that  wherever  an  organization 
becomes  too  bulky  to  do  its  work  successfully,  that  it  will  give 
way  in  the  struggle  for  existence  to  smaller  and  more  efficient 
organizations,  just  as  the  monsters  of  the  Saurian  era  have  van- 
ished from  the  world,  while  so  many  of  the  minuter  forms  of  life 
still  remain  in  healthy  activity.  Some  of  these  men  have  even 
shown  us  what  they  consider  the  law  which  will  guard  society 
against  the  evils  of  accumulated  capital.  I  was  much  impressed 
with  a  recent  article  in  the  September  number  of  the  Review 
of  Reviews,  entitled,  "Why  the  Trusts  Cannot  Control  Prices/' 
from  the  pen  of  Hon.  George  E.  Eoberts,  Director  of  the  Mint.  He 
insists  that  there  is  in  the  world  a  leveling  force  which  continu- 
ally operates  to  reduce  the  value  of  what  has  been  inherited  or 
accumulated  in  the  past,  and  to  enhance  the  importance  of  the 
ability  to  do  things  in  the  present;  that  the  profits  and  earnings 
of  capital  have  been  declining  on  account  of  the  rapid  accumula- 
tion of  capital  itself,  and  that  this  loss  has  been  distributed  by 
means  of  lower  prices  to  the  multitude ;  that  the  amount  of  wealth 
seeking  investments  will  constantly  and  rapidly  increase,  and 
that  all  efforts  to  fence  up  the  several  fields  of  industry  for  quiet 
possession  by  a  few  with  extraordinary  returns,  are  inevitably 
doomed  to  failure;  that  accumulating  capital  can  only  find  em- 
ployment through  the  increased  purchasing  power  of  the  masses ; 
that  the  abnormal  profits  of  the  successful  trust  must  be  invested 
and  the  beneficiaries  would  constantly  encroach  upon  their  neigh- 
bors' preserves;  that  therefore  these  new  combinations,  if  they 
seek  extraordinary  profits,  are  opposing  a  force  greater  than  them- 
selves, that  will  persist  forever; that  the  trusts  are  therefore  bound 
to  divide  their  profits  with  the  consumers  rather  than  sacrifice 
them  in  a  hopeless  attempt  to  buy  off  an  endless  succession  of  new 
competitors ;  that  the  more  rapidly  capital  increases  in  the  hands 

457 


of  investors,  the  greater  the  pressure  to  find  employment  at  even 
nominal  terms,  and  the  more  difficult  to  maintain  a  profitable 
monopoly ;  and  that  the  new  capital  coming  into  the  market  to- 
morrow will  protect  the  public  against  the  combinations  of  the 
old. 

But  even  if  we  do  not  concur  in  the  conclusions  of  Mr.  Kob- 
erts,  even  if  we  see  in  the  present  tendency  a  menace  to  our  social 
life,  still  I  fear  that  it  will  be  found  impossible  entirely  to  eradi- 
cate the  present  tendency  of  our  great  industries  toward  combina- 
tion and  monopoly. 

The  numerous  laws  which  have  already  been  enacted  to  break 
up  trade  agreements,  pools,  and  technical  trusts,  have  been  inef- 
fective. •  They  have  resulted  in  the  organization  of  larger  cor- 
porations which  are  more  permanent  and  more  dangerous  in  their 
character  than  the  things  which  are  prohibited  by  statute.  If 
it  were  possible  to  break  up  these  corporations,  which  may  well 
be  doubted,  the  men  who  compose  them  would  unite  perhaps 
in  partnerships  or  other  forms  of  union  to  accomplish  the  same 
objects.  If  you  break  up  these  there  are  infinite  varieties  of  or- 
ganization which  will  take  their  place.  The  tendency  of  men  to 
associate  for  the  accomplishment  of  a  common  purpose  is  like 
the  law  of  gravitation,  and  no  statute  will  be  found  effective 
against  such  a  tendency. 

I  should  like  to  consider  in  greater  detail  the  reasons  why  the 
trusts  cannot  be  entirely  overthrown.  But  you  have  not  come 
here  to-night  to  hear  me,  but  to  listen  to  a  far  abler  and  more  dis- 
tinguished gentleman,  and  I  will  close. 

I  wish,  however,  to  refer  to  another  fact  which  has  passed  into 
history,  and  which  may  guide  your  judgment.  Trades  unions 
were  illegal  at  the  common  law  just  as  the  monopoly  of  consoli- 
dated capital  is  to-day.  Every  combination  of  laborers  to  advance 
wages  was  punished  as  an  offense  against  the  so-called  law  of  free 
competition  in  the  labor  market.  But  competition  had  to  give 
way  to  co-operation,  and  who  shall  say  that  the  condition  of  the 
workingman  has  not  been  improved?  Will  not  the  legal  barriers 
which  failed  before  organized  labor  be  found  equally  ineffective 
against  organized  capital?  Organization  is  part  of  the  world's 
progress,  even  though  we  cannot  fully  see  whither  that  progress 
tends.  This  much  is  surely  evident,  that  if  legislation  cannot 
overthrow  the  present  tendency  to  combination,  it  is  worse  than 
useless  to  enact  for  that  purpose  laws  which  shall  cripple  the 
productive  agencies  of  the  country  while  they  fail  to  accomplish 
the  end  they  have  in  view. 

The  present  consolidating  tendency  of  our  industrial  life  is 

458 


largely  beyond  our  control.  We  can  guide  it  only  a  little  way 
upon  its  journey,  for  the  most  part  we  shall  have  to  stand  aloof 
whether  we  will  or  no,  and  see  the  salvation  of  the  Lord.  And 
if  better  things  develop  than  we  dream,  it  will  not  be  the  first 
instance  in  the  evolution  of  our  race  where  good  has  been  the 
final  outcome  of  apparent  evil,  and  where  the  agencies  which 
seemed  to  portend  disaster  and  ruin  have  been  in  the  end  the  min- 
isters of  prosperity  and  happiness. 

Mr.  Foulke  was  in  the  midst  of  his  paper  when  Mr.  Cockran 
entered  and  made  his  way  to  the  seat  reserved  for  him  on  the  plat- 
form. The  audience  made  a  demonstration  of  welcome,  while 
the  speaker  smilingly  suspended  his  remarks.  He  resumed,  but 
had  not  concluded  when  Col.  W.  J.  Bryan  entered  and  another 
outbreak  of  applause  followed.  Smiling  at  the  interruption, 
Mr.  Foulke  said : 

"I  perceive  you  have  come  to  hear  some  one  else." 
There  were  prolonged  applause  'and  cheers  for  the  speaker 
with  cries  of  "Go  on!  go  on!"  and  Mr.  Foulke  concluded  without 
further  interruption. 

EDWARD  ROSEWATER. 

Publisher  Omaha  Bee. 

Edward  Rosewater,  of  Nebraska,  was  the  next  speaker,  and 
said: 

We  are  confronted  by  grave  problems  generated  by  the  indus- 
trial revolution  of  the  nineteenth  century.  The  trust  is  but  the 
outgrowth  of  natural  conditions.  The  trend  of  modern  civiliza- 
tion is  toward  centralization  and  concentration.  This  tendency 
is  strikingly  exhibited  in  the  congestion  of  population  in  large 
cities,  the  building  of  mammoth  hotels,  tenement  blocks,  sky- 
scraper office  buildings,  the  department  store  and  colossal  manu- 
facturing plants. 

The  monopolistic  combination  of  corporate  capital  known  as 
trusts  has  its  origin  in  overproduction  and  ruinous  competition. 
Honestly  capitalized  and  managed  with  due  regard  for  the  well 
being  of  their  employees  and  operated  economically  for  the  bene- 
fit of  consumers  of  their  product  these  concerns  would  be  harm- 
less. Within  the  past  decade  the  trusts  have,  however,  for  the 

459 


most  part,  degenerated  into  combinations  for  stock  jobbing. 
Nearly  every  trust  recently  organized  had  its  incentive  in  the 
irresistible  temptation  held  out  by  the  professional  promoter  to 
capitalize  competing  plants  enormously  in  excess  of  their  actual 
value.  This  fictitious  capitalization  constitutes  the  most  dan- 
gerous element  of  the  modern  trust.  In  nearly  every  instance 
overcapitalization  becomes  the  basis  for  raising  the  price  of  trust 
products  and  invariably  lays  the  foundation  for  bank  failures, 
panics  and  all  the  ills  that  follow  in  their  train. 

It  has  been  asserted  from  this  platform  that  fraudulent  capi- 
talization is  an  evil  that  will  cure  itself  and  at  the  very  worst  con- 
cerns only  the  stock  speculators  who  voluntarily  assume  the  risk 
of  investment  in  over-valued  trust  securities.  Experience  has 
exploded  this  delusive  theory.  Nearly  all  the  so-called  "indus- 
trials" are  on  the  market  and  the  owners  of  over-valued  plants 
either  dispose  of  their  holdings  or  place  them  in  banks  as  collat- 
eral for  loans  negotiated  for  speculative  schemes  financiered  on 
the  baloon  plan.  The  inevitable  outcome  in  cases  of  money  strin- 
gency or  panic  is  shrinkage  and  collapse  of  the  concerns  involved. 
Banks  rarely  loan  their  own  money,  but  that  of  their  depositors, 
and  when  the  banks  go  to  the  wall  the  whole  commercial  and 
industrial  fabric  is  involved  in  wreck  and  ruin.  This  means  the 
destruction  of  confidence  and  wide-spread  distress  to  the  toilers 
in  every  field  of  industry.  Fraudulent  capitalization  is,  more- 
over, not  merely  a  menace  to  the  well  being  of  the  present  genera- 
tion, but  also  endangers  the  future  of  generations  yet  unborn. 
It  is  an  open  secret  that  life  insurance  funds  held  in  trust  for  the 
widows  and  orphans  of  policyholders  are  invested  in  industrial 
securities  resting  on  a  foundation  of  sand  and  water. 

It  is  a  matter  of  history  that  every  panic  that  has  ever  occurred 
in  this  country  was  brought  about  by  inflation.  The  panic  of 
1837  was  caused  by  wild  land  speculation  and  inflation  of  land 
values.  The  panic  of  1857  was  precipitated  by  the  enormous 
inflation  of  paper  currency  issued  by  wildcat  banks  and  conse- 
quent overspeculation  and  inflation  of  values  of  all  classes  of 
property.  The  panic  of  1873,  ascribed  to  the  failure  of  Jay 
Cook  and  the  collapse  of  the  Northern  Pacific,  was  in  reality  due 
to  the  inflation  caused  by  an  almost  unlimited  issue  of  green- 
backs and  consequent  reckless  speculation  in  railway  stocks  and 
other  securities  that  had  been  fraudulently  inflated.  The  panic 
of  1893  was  again  caused  by  the  enormous  inflation  of  securities 
issued  by  railroads  and  industrial  concerns  of  every  description, 
among  which  the  trust  securities  were  quite  prominent. 

The  imperative  duty  of  this  conference  is  to  devise  measures 

460 


that  will  make  the  trusts  harmless.  With  this  end  in  view  it 
should  recommend : 

First — The  creation  by  act  of  Congress  of  a  bureau  of  super- 
vision and  control  of  corporations  engaged  in  interstate  com- 
merce with  powers  for  its  chief  similar  to  those  exercised  by  the 
comptroller  of  the  currency  over  national  banks. 

Second — Legislation  to  enforce  such  publicity  as  will  effectu- 
ally prevent  dishonest  methods  of  accounting  and  restrict  traffic 
and  competition  within  legitimate  bounds. 

Third — The  abrogation  of  all  patents  and  copyrights  held  by 
trusts  whenever  the  fact  is  established  before  a  judicial  tribunal 
that  any  branch  of  industry  has  been  monopolized  by  the  holders 
of  such  patents  or  copyrights. 

Fourth — The  enactment  by  Congress  of  a  law  that  will  com- 
pel every  corporation  engaged  in  interstate  commerce  to  operate 
under  a  national  charter  that  shall  be  abrogated  whenever  such 
corporation  violates  its  provision. 

Fifth — The  creation  of  an  interstate  commerce  court  with 
exclusive  jurisdiction  in  all  cases  arising  out  of  the  violation  of 
interstate  commerce  laws. 

Sixth — The  revision  of  the  Constitution  of  the  United  States 
by  a  constitutional  convention  to  be  called  by  two-thirds  of  the 
states  at  the  earliest  possible  date,  as  provided  by  article  V  of  the 
federal  Constitution,  which  reads  as  follows:  "The  Congress, 
whenever  two-thirds  of  the  states  shall  deem  it  necessary,  shall 
propose  amendments  to  this  Constitution,  or  on  the  application 
of  the  legislatures  of  two-thirds  of  the  several  states  shall  call  a 
convention  for  proposing  amendments  which  in  each  case  shall  be 
valid  to  all  intents  and  purposes,  or  part  of  this  Constitution 
when  ratified  by  the  legislature,  if  three-fourths  of  the  several 
states  or  by  conventions  in  three-fourths  thereof  as  the  pne  or 
the  other  mode  of  ratification  may  be  proposed  by  the  Congress/' 

It  will  be  noted  that  the  initiative  for  the  adoption  of  separate 
amendments  to  the  Constitution  must  be  taken  by  Congress  while 
the  initiative  for  a  revision  of  the  Constitution  can  be  taken  by 
the  states  through  their  legislatures  and  when  two-thirds  of  the 
states  have  endorsed  the  proposal  it  becomes  mandatory  on  Con- 
gress to  call  a  constitutional  convention  and  submit  its  work  for 
ratification.  Manifestly,  the  revision  of  the  Constitution  is  more 
certain  by  a  convention  called  by  the  states  than  would  be  an 
amendment  proposed  by  Congress,  which  is  not  likely  to  pass  the 
ordeal  of  a  two-thirds  vote  of  the  United  States  Senate  so  long  as 
its  members  are  not  elected  by  the  direct  vote  of  the  people.  In 
my  judgment,  the  time  is  ripe  for  such  a  revision  of  our  funda- 

461 


mental  law  as  will  make  it  conform  to  the  changed  conditions 
wrought  by  more  than  a  century's  marvelous  industrial  evolution, 
commercial  growth  and  territorial  expansion. 

While  the  trusts  might  be  reached  by  a  single  amendment  to 
the  Constitution,  I  doubt  very  much  whether  anything  could  be 
gained  by  such  patch-work,  since  the  Constitution  contains  many 
other  provisions  that  would  constitute  a  bar  to  effective  enforce- 
ment of  the  interstate  commerce  law.  The  mode  of  procedure 
for  securing  a  single  amendment  is,  if  anything,  more  cumber- 
some and  ratification  thereof  more  difficult  to  obtain  than  would 
be  a  complete  revision  of  the  organic  law  of  the  land. 

If  you  will  examine  the  Constitution  you  will  see  that  it  lies 
within  the  power  of  the  states  to  call  a  national  constitutional 
convention  whenever  two-thirds  have  concurred  in  such  call, 
whereas  the  ordinary  amendment  requires  the  concurrence  of 
two-thirds  of  each  of  the  houses  of  Congress,  which  is  very  diffi- 
cult to  procure  in  view  of  the  tremendous  influence  exercised  over 
the  Senate  by  the  confederated  corporations. 

Take,  for  instance,  an  amendment  to  elect  United  States 
senators  by  popular  vote.  Do  you  believe  that  the  Senate  will 
ever  vote  for  an  amendment  that  would  bar  out  two-thirds  of  its 
members?  Do  you  believe  that  a  trust-made  Senate  will  ever 
vote  a  constitutional  amendment  that  would  abolish  the  trusts? 


W.  BOUEKE  COCKKAN. 

Perhaps  twice  or  thrice  in  the  lifetime  of  a  brilliant  and  popu- 
lar speaker  does  he  receive  such  an  ovation  as  was  accorded 
Bourke  Cockran  when  he  stepped  to  the  rostrum  and  bowed  his 
acknowledgments  of  Chairman  Howe's  introduction.  It  was 
several  minutes  before  he  could  do  more,  but  finally  the  cheering, 
applauding,  handkerchief  waving  assemblage  became  calm  and 
Mr.  Cockran  began : 

No  person  who  has  listened  to  the  papers  read  from  this  plat- 
form during  the  last  three  days  can  doubt  that  the  object  of  this 
gathering  is  an  honest  search  for  truth.  I  think  the  country  is 
to  be  congratulated  upon  some  of  the  contributions  to  this  discus- 
sion, particularly  those  from  the  representatives  of  the  trades 
unions,  and  of  the  National  Grange. 

As  I  realized  the  sound  conceptions  of  economic  law  which  dis- 
tinguished many  of  the  addresses  delivered  by  delegates  from 

462 


labor  organizations,  I  became  convinced  that  the  laborers  who 
spoke  to  us  understood  these  laws  much  better  than  their  employ- 
ers. Indeed,  I  believe  some  recent  events  in  our  history  would 
have  been  impossible  if  every  element  engaged  in  production 
understood  the  true  relations  of  employer  to  employee  as  well  as 
'one  element  showed  that  it  understood  them  this  very  day. 

The  precise  question  which  we  have  been  called  to  consider  is 
the  effect  produced  by  combinations,  whether  of  capital  or  of 
labor,  upon  the  general  prosperity  of  the  community.  The  first 
step  towards  a  solution  of  this  problem  is  to  ascertain  just 
what  we  mean  by  prosperity.  One  of  the  great  difficulties  in  the 
way  of  philosophical  inquiry  into  economic  subjects  is  a  very 
general  tendency  to  use  vague,  sonorous  and  misleading  phrases, 
which  instead  of  making  a  difficult  problem  clearer  serves  to 
becloud  it,  obscuring  its  outlines,  and  magnifying  its  dimen- 
sions. In  the  controversies  which  have  arisen  over  this 
industrial  question,  certain  expressions  have  become  perverted 
from  their  original  significance  and  have  acquired  a  strange 
power  of  provoking  men  to  excitement,  if  not  belligerency,  so  that 
oftentimes  we  find  ourselves  embarrassed  in  discussing  facts  which 
concern  us  by  words  which  excite  us.  The  word  ."trust,"  for 
instance,  a  word  originally  of  highly  respectable  significance,  has 
become  discredited — apparently  by  association  with  millionaires 
— so  that  its  application  to  a  business  enterprise  is  now  the  signal 
for  discarding  the  sober  language  of  argument  and  for  invoking 
the  violent  epithets  of  denunciation. 

For  the  purpose  of  establishing  an  intelligent  basis  of  discus- 
sion, free  from  terms  likely  to  provoke  passionate  declamation,  I 
shall  define  prosperity  as  an  abundance  of  commodities  fairly  dis- 
tributed among  those  who  produce  them.  Now,  this  is  not  to 
state  two  separate  and  distinct  conditions,  but  rather  two  aspects 
of  one  condition.  For,  my  friends,  I  hope  to  establish  before  I 
conclude  that  there  cannot  be  abundant  production  of  commodi- 
ties without  an  extensive  distribution  of  them  in  the  form  of 
wages  wherever  industry  is  based  upon  freedom.  Whether  that 
distribution  be  as  general  as  we  might  wish,  is  a  question  which 
we  will  consider  hereafter;  meanwhile  we  can  all  agree  that 
distribution  can  be  extensive  only  where  production  is  abundant. 
We  must  have  commodities  in  existence  before  we  can  distribute 
them  in  the  form  of  wages  or  of  profits.  If  this  definition  of 
prosperity  be  correct,  it  must  follow  that  any  industrial  organiza- 
tion or  system  which  operates  to  swell  the  volume  of  production 
should  be  commended,  and  any  that  operates  to  restrict  it  should 
be  condemned.  For  my  part,  I  could  never  understand  why  a  sen- 

463 


sible  man  should  grow  excited  either  to  approval  or  resentment 
over  a  combination  as  such.  A  combination  may  be  good  or  bad, 
according  to  its  effect.  A  combination  for  prayer  is  a  church. 
All  good  men  would  subscribe  to  the  success  of  it.  A  combi- 
nation for  burglary  is  a  conspiracy.  All  good  men  would  call  out 
the  police  to  prevent  it. 

Whether  combinations  of  capital  operate  to  raise  prices  or  to 
reduce  them  is  a  subject  about  which  there  has  been  a  wide  diver- 
sity of  opinion,  not  merely  in  this  hall,  but  wherever  economic 
questions  are  discussed.  While  I  am  fully  conscious  that  the 
movements  of  prices  depend  upon  many  forces,  or  perhaps  I  should 
rather  say,  upon  every  force, — upon  the  fertility  of  the  soil,  upon 
the  sun  that  quickens  the  seed,  upon  the  rains  that  refresh  it, 
upon  the  rivers  which  facilitate  the  transportation  of  the  crop 
harvested  on  the  surface  of  the  earth,  and  of  the  minerals  yielded 
from  its  bosom, — upon  every  element  of  nature  as  well  as  upon 
the  industry  of  man.  I  think  it  is  beyond  question  that  some 
combinations  of  capital  operate  to  cheapen  commodities  and  some 
operate  to  make  them  dearer. 

Ladies  and  gentlemen,  I  believe  there  is  a  very  simple  test  by 
which  we  can  always  determine  the  effect  on  prices  of  any  success- 
ful industrial  organization,  and  that  is  to  ascertain  whether  it 
flourishes  through  government  aid  or  without  it.  You  must  see, 
my  friends,  that  an  industrial  enterprise  which  dominates  the 
market  without  aid  from  government,  must  do  so  by  cheapening 
its  product,  or,  as  it  is  commonly  described,  by  underselling  com- 
petitors. An  industry  which  at  one  and  the  same  time  reduces 
the  price  of  its  product  and  swells  its  own  profits  can  accomplish 
that  result  in  one  way,  and  one  way  only,  and  that  is  by  in- 
creasing the  volume  of  its  production.  On  the  other  hand, 
an  industry  which  flourishes  through  the  aid  of  govern- 
ment, direct  or  indirect,  cannot,  in  the  nature  of  things,  be  a  force 
to  lower  prices,  because  if  it  could  dominate  the  market  by  under- 
selling competitors  in  a  free  and  open  field  it  would  not  need 
government  favor.  In  that  case,  any  interference  of  govern- 
ment with  its  business  would  be  an  injury,  not  a  benefit. 
The  prosperity  of  an  enterprise  enjoying  government  favor,  de- 
pends not  on  the  excellence  of  its  service,  but  on  the  inability  of 
people  to  purchase  elsewhere.  Such  a  corporation,  or  combina- 
tion, never  operates  to  stimulate  the  volume  of  production,  but 
always  to  restrict  it,  because  a  government's  aid  to  industry  is 
effective  only  when  it  is  exercised  to  extort  from  the  public  a  vol- 
ume of  profit  which  without  it  could  be  gained  only  by  a  larger 
output.  Whatever  may  be  our  opinions  of  industrial  enterprises 

464 


dominating  the.  market  by  cheapening  products,  I  believe  we 
are  unanimous  in  condemning  as  detrimental  to  prosperity  every 
concern  whose  revenues  derived  from  consumers  forced  to  deal 
with  it  on  its  own  terms  are  not  profits  earned  by  substantial 
service,  but  tribute  exacted  from  a  community  made  helpless  in 
its  hands. 

There  are  three  ways  by  which  in  this  country  government 
interferes  with  the  trade  of  individuals.  One  is  by  patent  laws. 
It  is  not  my  purpose,  ladies  and  gentlemen,  to  intensify  differ- 
ences of  opinion  among  us,  but  to  emphasize  the  points  on  which 
we  can  agree,  and,  if  possible^  to  extend  the  field  of  our  agree- 
ment. Questions  which  cannot  possibly  be  settled  or  even 
affected  by  anything  which  this  conference  might  do  or  advise,  it 
would  be  utterly  useless  to  discuss.  I  will  not  waste  time,  there- 
fore, in  considering  the  effect  of  exclusive  patents  on  industrial 
conditions. 

Another  method  of  government  interference  with  trade  is  by 
tariff  laws.  Every  person  must  concede,  whether  he  believes  in 
high  tariff  or  free  trade,  that  a  protective  tariff  fosters  combina- 
tions to  control  the  market  in  one  way.  It  restricts  competition 
in  any  commodity  to  those  producing  it  in  this  country.  Under 
a  condition  of  free  trade  every  article  seeking  a  market,  wherever 
produced,  is  exposed  to  the  competition  of  the  whole  world. 
Obviously  the  control  of  a  market  by  a  combination  or  trust  is 
facilitated  where  the  field  of  competition  is  artificially  limited, 
since  it  is  easier  to  combine  the  producers  of  one  country  than' 
those  of  all  countries;  to  that  extent  the  tariff  encourages  trusts. 

It  is  proper  to  say,  however,  that  according  to  the  protectionist 
the  exclusion  of  foreign  competition  develops  a  domestic  com- 
petition much  keener  and  in  some  mysterious  way,  more  benefi- 
cent. I  do  not  understand  his  logic,  but  I  think  that  is  a  fair 
statement  of  his  proposition.  The  tariff  has  been  discussed  in 
this  country  for  some  eight  or  ten  years,  and  the  question  is  still 
unsettled.  As  it  has  become  a  party  question  we  cannot  hope  to 
settle  it  here,  and  therefore  we  will  relegate  it  to  the  forum  in 
which  all  political  issues  must  be  decided. 

There  is  a  third  and  very  serious  form  of  government  interfer- 
ence with  trade  which  I  think  we  can  discuss  profitably  and  which 
in  my  judgment  has  had  a  wider  influence  in  promoting  indus- 
trial combinations  than  the  tariff.  I  refer  to  special  favors 
extended  to  certain  industries  by  great  corporations  exercising 
public  franchises.  I  call  this  form  of  discrimination  government 
favor,  because 'these  corporations  are  essentially  agencies  of  the 
government  although  their  stocks  are  owned  by  private  individuals. 

465 


No  person  can  enjoy  a  favor  at  the  hands  of  any  company  exercis- 
ing a  public  franchise  except  at  the  expense  of  another.  This  is 
true  in  every  instance  where  government  extends  special  favor  to 
an  individual.  I  have  said  in  many  places,  and  I  say  here,  that 
government  cannot  at  one  and  the  same  time  be  a  fountain  of 
generosity  and  of  justice.  Government  cannot  of  itself 
create  anything.  It  cannot  by  any  exercise  of  its  own 
powers,  compel  the  boards  that  constitute  this  desk  to  become  a 
useful  article  of  furniture;  it  cannot  summon  the  elements  of 
this  building  from  their  original  places  and  command  them  to 
become  a  durable  edifice ;  it  cannot  cause  two  blades  of  grass  to 
grow  where  one  grew  before ;  it  cannot  make  a  barren  field  fruit- 
ful. Now,  if  government  cannot  create  anything  it  has  nothing 
of  its  own  to  bestow  on  anybody.  If  then  it  undertake  to  enrich 
one  individual,  the  thing  which  it  gives  him  it  must  take  from 
another.  A  government  cannot  be  just  and  generous  at  the 
same  time,  for  if  it  be  generous  to  one  it  must  be  oppres- 
sive to  another.  If  it  have  a  favorite  it  must  have  a  victim,  and 
that  government  only  is  just  and  beneficent  which  has  neither 
favorites  nor  victims.  Government  is  always  just  and  always 
beneficent  when  it  is  absolutely  impartial.  Not  merely  must  its 
own  hands  be  impartial,  but,  to  paraphrase  Lord  Bacon,  the 
hands  of  its  hands  must  be  impartial;  not  merely  must  its  laws 
be  impartial,  its  courts  impartial,  its  executive  officers  impartial, 
but  the  agencies  which  it  empowers  to  discharge  functions  essen- 
tially public,  must  be  impartial  in  their  service  to  every  human 
being  within  the  limits  of  the  state. 

It  must  be  clear  that  if  one  person  obtain  rates  of  transporta- 
tion unusually  favorable,  in  other  words,  if  his  goods  be  trans- 
ported for  less  than  the  service  costs,  other  men  using  the  same 
means  of  transportation  must  make  good  the  loss.  Discrimina- 
tion of  this  character  is  destructive  of  free  competition.  The 
producer  who  gets  the  benefit  of  it  is  able  to  undersell  his  com- 
petitor, not  by  the  superiority  of  his  product,  but  by  the  favor 
of  the  government  agency.  Profit  is  the  object  of  all  industrial 
effort.  If  the  favor  of  a  corporation  be  a  shorter  pathway  to 
it  than  efficient  service  to  the  public,  the  ingenuity,  enterprise 
and  talent  of  men  will  be  diverted  from  the  wholesome  competi- 
tions of  industrial  skill  to  debasing  and  corrupting  intrigues  for 
corporate  favor.  Is  there  any  remedy  for  this  form  of  oppres- 
sion? Some  gentlemen  have  suggested  municipal  ownership  as  a 
cure  for  corporate  misconduct.  Ladies  and  gentlemen,  I  have  no 
irreconcilable  quarrel  with  that  suggestion.  I  concede  the  prin- 
ciple of  municipal  ownership. 

466 


Any  public  service  which  the  government  can  authorize  a  cor- 
poration to  perform,  it  can  perform  itself.  The  only  excuse  for 
empowering  a  private  corporation  to  discharge  a  public  function 
is  the  belief  that  it  will  perform  the  service  more  efficiently.  The 
question  of  municipal  ownership  then  is  a  mere  question  of 
expediency. 

Can  a  government  through  the  machinery  of  its  civil  service, 
administer  a  railway,  a  gas  company  or  a  telegraph  system,  as 
efficiently  as  private  individuals  inspired  by  hope  of  extensive 
profits,  and  with  the  peculiar  capacity  developed  by  years  of  expe- 
rience in  a  particular  calling?  I  won't  debate  that  question  here, 
because  if  municipal  ownership  of  public  franchises  be  a  remedy 
for  existing  evils,  it  is  such  a  remote  one  that  to  discuss  it  would 
be  to  discuss  the  interests  of  our  children  rather  than  of  ourselves. 

There  are  many  grave  obstacles  to  be  overcome  before  mu- 
nicipal ownership  could  be  reduced  to  practical  operation,  even 
though  we  should  set  about  establishing  it  to-day.  On  what 
basis  of  valuation  would  we  compute  the  interest  of  the  present 
owners?  Should  it  be  fixed  on  the  basis  of  what  these  enterprises 
can  earn  or  on  what  it  would  cost  to  reproduce  them?  To  take 
them  on  a  valuation  fixed  according  to  their  present  earning 
power  would  be  a  very  hazardous  speculation.  It  is  exceedingly 
doubtful  if  under  the  administration  of  public  officials  they  could 
be  managed  as  economically  as  they  are  now  under  the  manage- 
ment of  specially  trained  experts.  But  if  the  cost  of  operation  be 
increased,  the  rates  charged  for  service  must  be  raised.  If  the 
rate  of  fare  from  New  York  to  Chicago  were  increased  or  the 
quality  of  the  service  impaired,  the  result  would  be  none  the  less  a 
public  calamity  because  it  was  a  feature  of  municipal  ownership. 

If  it  should  be  decided  to  limit  the  compensation  of  the  pres- 
ent owners  to  the  cost  of  reproducing  existing  railway,  telegraph 
or  gas  plants,  another  and  more  difficult  question  would  arise. 
Has  the  state,  after  allowing  and  encouraging  the  original  grant- 
ees of  these  franchises  to  dispose  of  them  to  innocent  holders  on  a 
valuation  based  oh  their  earning  power,  any  right  to  take  those 
franchises  back  upon  a  different  valuation? 

Moreover,  questions  involving  the  powers  of  municipalities 
under  special  constitutional  provisions  would  have  to  be  set- 
tled, before  one  step  could  be  taken  in  the  reduction  of  this 
plan  to  practical  operation.  On  the  whole,  while  the  theory  of 
municipal  ownership  is  highly  ingenious  and  highly  interesting, 
yet,  like  the  suggestion  of  a  convention  to  frame  a  new  constitu- 
tion for  the  United  States,  as  a  remedy  for  pressing  evils  it  is 
somewhat  remote. 


467 


Can  this  conference,  then,  suggest  any  practical  remedy  which 
could  be  put  in  force  to-morrow,  by  any  legislature  that  may  be  in 
session?  My  friends,  it  seems  to  me  there  is  a  very  effective 
remedy  and  a  very  simple  one.  It  would  not  be  necessary  to 
frame  a  law  prohibiting  special  privileges  to  individuals  from 
public  corporations ;  that  is  the  law  to-day.  The  remedy  is  sim- 
ply to  prescribe  a  definite  penalty  for  violation  of  it,  and  to  pro- 
vide for  publicity  in  all  the  transactions  of  a  corporation  exer- 
cising public  franchises.  No  fines,  no  judicial  rebukes,  no  de- 
nunciations from  platforms,  no  legislative  enactments  merely 
declaring  things  to  be  reprehensible  will  eradicate  the  evil,  but 
a  simple  statute  giving  every  shipper,  every  person  using  a  public 
franchise  of  any  kind,  the  right  to  have  disclosed  to  him  at  any 
time  every  contract  and  agreement  made  with  any  other  person 
for  a  similar  service  and  declaring  the  grant  of  a  special  rate  by  a 
corporation  a  felony  punishable  by  a  long  term  of  imprisonment, 
will  cure  it  effectually. 

My  friends,  there  is  no  disproportion  between  the  offense  of 
which  we  complain  and  the  remedy  suggested.  Discrimination 
in  the  rates  charged  for  a  service  essentially  public  is  a  crime  of 
the  first  magnitude.  The  corporation,  exercising  powers  con- 
ferred by  the  state  for  the  benefit  of  all  which  denies  one  man 
opportunities  enjoyed  by  others,  robs  him,  if  not  of  property  in 
his  possession,  of  the  opportunity  to  acquire  property. 

Publicity  of  corporate  proceedings  would  accomplish  more 
than  the  prevention  of  discrimination  in  rates.  It  would  go  far 
towards  curing  the  most  conspicuous  and  the  most  crying  evils  of 
corporate  management. 

We  have  heard  much  about  the  evils  of  over-capitalization. 
Indeed,  it  is  one  of  the  subjects  which  this  conference  is  called  to 
consider.  In  one  sense,  I  do  not  regard  over-capitalization  as  a 
matter  of  importance;  in  another  sense,  I  think  it  has  a  serious 
aspect.  The  nominal  capitalization  of  an  enterprise  in  itself  is  a 
matter  of  little  moment.  If  an  enterprise  earning  ten  thousand 
dollars  a  year  is  capitalized  at  one  hundred  thousand  dollars,  the 
stock  would  probably  sell  at  two  hundred ;  if  it  were  capitalized  at 
four  hundred  thousand  dollars,  the  shares  would  sell  at  fifty.  In 
either  case,  the  actual  value  of  the  stock  would  be  two  hundred 
thousand  dollars.  That  value  is  established  not  by  the  rate  of 
capitalization,  but  by  the  opinion  of  the  public,  and  that  value 
would  remain  undisturbed  no  matter  what  the  nominal  capitaliza- 
tion might  be. 

The  gentleman  who  opened  this  conference,  Professor  Jenks, 
in.  his  admirable  statement  of  the  questions  to  be  considered,  pre- 
468 


Rented  this  question  of  over-capitalization  by  means  of  a  very 
striking  illustration.  He  mentioned  the  case  of  a  newspaper 
earning  one  hundred  thousand  dollars  a  year,  and  pointing  out 
that  according  to  its  earning  capacity  it  represented  a  capital  of 
at  least  one  million  dollars,  although  one  hundred  thousand 
would  reproduce  its  presses,  its  building  and  its  entire  plant, — all 
except  the  editor,  he  asked  this  conference  to  say  at  what 
sum  would  it  be  fair  to  capitalize  such  an  enterprise.  It 
seems  to  me  the  answer  is  very  simple.  Tell  the  public  to  whom 
you  offer  the  shares  candidly  and  frankly  the  whole  truth  about 
the  property,  and  capitalize  it  as  you  please.  If  you  capital- 
ize it  for  more  than  the  public  believe  it  to  be  worth,  your 
shares  will  sell  at  a  discount;  if  you  capitalize  it  for  less  they 
will  sell  at  a  premium.  The  nominal  capitalization  is  the  asking 
price  of  the  seller,  the  market  value  of  the  stock  is  the  price 
actually  paid  by  the  buyers.  If  I  ask  a  million  dollars  for  a  build- 
ing and  take  one  hundred  thousand  for  it,  nobody  is  injured  by 
the  price  demanded,  and  nobody  has  a  right  to  question  the  price 
which  I  receive  provided  no  element  of  fraud  or  misrepresentation 
has  entered  into  the  bargain. 

A  high  rate  of  capitalization  even  of  a  corporation  exercising 
public ,  franchise,  is  not  necessarily  an  injury  to  the  public.  I 
can  imagine  a  case  where  an  increase  of  capitalization  without  any 
investment  of  additional  capital  might  be  a  great  public  benefit. 
Assume  for  a  moment  that  the  Western  Union  Telegraph  Com- 
pany should  reduce  its  rates  to  five  cents  per  message,  and  that 
instead  of  being  diminished  its  profits  were  doubled  thereby, 
should  anybody  object  to  an  increase  of  its  capitalization  based 
on  such  an  improvement  of  its  service?  If  it  undertook  to 
swell  its  profits  by  increasing  the  cost  of  telegraph  service,  then 
every  weapon,  legislative  and  executive,  should  be  invoked  to  pre- 
vent it.  The  injury  to  the  public  would  not  be  the  increase  of 
capitalization,  but  the  increase  of  rates. 

The  idea  that  high  capitalization  forces  corporations  to  charge 
excessive  rates  in  order  to  pay  dividends,  is  wholly  erroneous.  A 
corporation  always  strives  for  the  maximum  profit,  regardless  of 
its  capitalization.  An  attempt  to  exact  excessive  profits  defeats 
itself  by  discouraging  consumption  and  encouraging  competition. 
Skill  in  business  management  is  shown  by  capacity  to  fix  that  rate 
for  a  product  which  yields  the  largest  margin  of  profit  consistent 
with  the  greatest  stimulus  to  consumption.  The  rate  of  capital- 
ization has  no  relation  to  the  cost  of  the  product,  and,  therefore,  it 
in  no  way  affects  the  consumer.  It  concerns  merely  the  holders  of 
the  stock,  that  is  to  say,  the  owners  of  the  enterprise.  It  is,  there- 

469 


fore,  a  question  between  partners,  in  which  the  community  as  a 
whole  has  no  interest. 

In  all  this,  however,  I  am  assuming  that  the  public  have  been 
treated  with  absolute  candor,  and  that  the  property  capitalized 
has  been  truthfully  described.  There  are  instances,  too  com- 
mon, unfortunately,  in  which  over-capitalization  of  corporations 
has  been  made  an  effective  engine  of  fraud.  The  capitalization, 
for  instance,  at  five  millions  of  an  enterprise  which  cannot  pay 
dividends  on  one,  by  men  whose  names  are  accepted  as  guarantees 
of  solvency,  honesty,  and  capable  management,  often  leads  the 
public  to  buy  the  shares  at  a  fictitious  value  without  any  direct  or 
specific  misrepresentations.  To  deceive  by  indirection  or  sup- 
pression is  as  much  a  fraud,  as  to  mislead  by  positive  falsehoods. 
A  false  pretense  by  which  a  dealer  on  the  Bowery  is  cheated  out  of 
a  pair  of  shoes,  is  called  a  swindle,  but  misrepresentation  on  Wall 
street  by  which  the  public  is  cheated  out  of  millions,  is  often  called 
a  financial  operation.  When  a  swindle  is  called  by  its  proper 
name  and  punished  as  such,  whether  it  be  perpetrated  on  the 
Bowery  for  a  few  cents,  or  in  Wall  street  for  millions  of  dollars, 
whether  it  be  in  the  crude  form  of  breaking  a  window  to  abstract 
valuables,  or  in  the  more  dangerous  form  of  inducing  thousands 
to  part  with  money  for  worthless  certificates,  swindling  will  be- 
come rare. 

If  in  every  instance  the  promoters  of  a  corporation  were  com- 
pelled to  state  the  whole  truth  about  the  enterprise  offered  to  the 
public,  it  is  plain  that  swindling  by  over-capitalization  would  be 
impossible.  For  this  species  of  fraud,  as,  indeed,  for  all  other 
frauds  growing  out  of  corporate  management,  the  remedy,  I  re- 
peat, is  publicity,  publicity,  publicity. 

While  on  this  subject  I  may  dwell  for  a  moment  on  what  to 
many  seems  an  unaccountable  phenomenon — the  public  dislike 
and  distrust  of  corporations.  Ladies  and  gentlemen,  I  don't  share 
that  hatred  and  dislike,  but  I  understand  it.  While  I  don't  think 
it  is  wholly  justified,  yet  I  believe  the  history  of  corporate  manage- 
ment in  this  country  explains  it.  Indeed,  I  hold  it  is  indisputable 
that  whenever  in  America  a  general  opinion  on  any  subject  is 
found  to  prevail,  there  is  always  pretty  good  ground  for  it. 

The  distrust  of  corporations  arises  not,  in  my  judgment, 
from  a  general  opposition  to  corporate  organizations,  but 
from  profound  distrust  of  corporate  administration.  My 
friend  from  Texas  whose  eloquent  periods  moved  this  body 
profoundly  on  the  first  day  of  our  session,  was  careful  in  his 
denunciation  of  corporate  oppression  to  distinguish  between  cor- 
porations which  served  the  public  faithfully  and  those  which 

470 


oppressed  the  public.  I  am  not  quite  sure  that  I  understood  all 
his  words,  but  I  think  he  and  I  sympathize  in  our  feelings.  "We 
do  not  object  to  the  principle  of  co-operation.  The  corporation 
is  the  natural  evolution  of  the  partnership.  It  is  a  scheme  by 
which  many  men,  strangers  to  each  other,  can  co-operate  in  various 
fields  of  industry  with  a  limited  risk  to  each,  while  partnership  is 
essentially  the  co-operation  of  a  few  men  well  known  to  each  other, 
who  are  compelled  to  devote  all  their  time  and  pledge  all  their 
resources  to  the  success  of  their  joint  enterprise.  A  man  by  hold- 
ing stock  in  different  corporations  may  participate  in  many 
enterprises  without  risking  all  his  capital  in  any  one,  while  the 
liabilities  and  conditions  of  partnership  are  such  that  few,  if  any, 
men  could  afford  to  be  concerned  in  more  than  one.  As  every 
device  which  facilitates  the  industrial  co-operation  of  men  pro- 
motes the  volume  of  production,  corporations  possess  enormous 
capacity  for  swelling  the  tide  of  human  prosperity,  and  they  have 
promoted  the  well-being  of  every  community  in  which  they  have 
been  encouraged,  in  spite  of  the  fact  that  the  management  of  cor- 
porations has  been  the  blackest  page  in  all  our  history. 

You  need  not  look  further  back  than  the  panic  of  1893  and 
the  corporate  management  which  preceded  it  to  find  abundant 
cause  for  indignation,  distrust,  and  alarm.  It  is  a  dreary,  shame- 
ful story  of  trusts  betrayed,  of  stockholders  deceived  and  plun- 
dered, of  corporations  wrecked  and  looted — their  treasuries 
emptied  by  faithless  officers  through  devices  ingeniously  fraud- 
ulent, until,  deprived  of  property,  of  resources,  and  of  credit, 
they  were  driven  over  the  precipice  of  insolvency  in  a  condition 
so  rotten  that  their  fall  was  almost  noiseless.  But  this  is  not  all. 
The  corporations  which  trusted  these  faithless  agents  were  not  the 
only  sufferers.  The  people  at  large  were  defrauded  of  untold 
millions.  "Worthless  securities  were  marketed  not,  it  is  true,  by 
specific  misstatements,  but  by  devices  still  better  calculated  to  de- 
fraud. Interest  was  paid  upon  bonds  where  it  had  never  been 
earned.  Dividends  weje  declared  upon  preferred  stock  when  the 
actual  revenues  showed  deficits  instead  of  profits.  The  people, 
deceived  by  these  evidences  of  prosperity,  bought  the  securities, 
only  to  find  when  the  collapse  came,  when  the  ruin  was  complete, 
that  in  nine  cases  out  of  ten  the  architects  of  these  frauds  were 
appointed  by  the  courts  receivers  of  the  enterprises  which  they 
had  wrecked,  enabling  them  to  control  the  process  of  reorganiza- 
tion and  to  conceal  the  proofs  of  their  crimes.  The  worst  feature 
of  this  miserable  story  is  that  all  these  perfidies,  all  these  frauds, 
all  these  infamies,  have  not  brought  one  hour  of  shame  or  pun- 
ishment to  those  who  perpetrated  them.  These  engineers  of  ruin 

471 


are  walking  the  streets  to-day,  their  heads  high  in  the  world  of 
finance.  Their  misdeeds  bring  upon  them  no  popular  condemna- 
tion, because  their  operations  have  been  shrouded  in  secrecy. 
To  the  best  informed  the  story  of  their  crimes  is  only  partially 
known,  to  the  vast  mass  of  the  people  it  is  a  sealed  book.  The 
masses  of  the  people  feel  instinctively  that  corporate  management 
has  been  frequently  a  fountain  of  oppression,  of  fraud  and  of 
corruption,  but  the  lack  of  specific  information  has  caused  the 
public  indignation  which  ought  to  be  visited  upon  the  officers 
responsible  for  this  shame  to  be  turned  on  the  corporations  who 
have  been  its  victims. 

We  hear  much  about  the  corruption  of  municipal  corpora- 
tion's. Well,  probably  they  are  corrupt ;  certainly  they  cannot  be 
more  so  than  they  are  believed  to  be.  But  the  govern- 
ment of  industrial  corporations  has  largely  escaped  public 
censure,  notwithstanding  the  recklessness  and  fraud  which  have 
characterized  it.  What  we  punish  as  corruption  in  politics,  we  are 
inclined  to  encourage  as  talent  in  finance.  The  courts  of  nearly 
every  state  record  prosecutions  of  public  officers  for  bribery.  I 
don't  believe  that  in  the  whole  history  of  our  jurisprudence  an 
officer  of  a  corporation  has  been  compelled  to  answer  at  the  bar 
of  a  criminal  court  for  corruption  or  fraud  perpetrated  by  the 
indirect  and  insidious  methods  which  I  have  endeavored  to 
describe. 

Mr.  Gompers  mentioned  to-day  the  complaints  which  labor 
organizations  make  against  the  courts  for  interfering  in  disputes 
between  employer  and  employee  by  the  writ  of  injunction.  The 
expression  "government  by  injunction"  has  become  a  political 
phrase,  and  so  we  must  exclude  it  from  these  discussions.  But, 
ladies  and  gentlemen,  I  will  say  that  to  me  it  has  always  been  a 
source  of  profound  regret  that  the  courts  which  have  displayed  so- 
much  ingenuity  in  devising  methods  to  prevent  corporations  from 
being  disturbed  by  their  employees  have  not  shown  half  that 
ingenuity  in  devising  methods  to  prevent  tfiem  from  being  robbed 
by  their  officers. 

Wherever  we  discover  corporate  abuse  we  find  that  it 
originates  in  secrecy,  that  it  is  developed  in  secrecy,  and  that  it  is 
maintained  in  secrecy.  Special  favors  could  never  be  granted  in 
the  light  of  day.  Misrepresentations  would  be  useless  if  all  the 
facts  within  the  knowledge  of  corporate  officers  were  imparted  to 
the  public.  Fraud  upon  corporations  by  the  directors  would 
never  be  attempted,  if  their  operations  were  conducted  within  full 
view  of  the  stockholders  and  of  the  public. 

Everybody  who  has  discussed  corporate  misconduct  on  the 

472 


platform  has  agreed  that  it  is  encouraged  by  the  secrecy  sur- 
rounding corporate  management.  Surely,  then,  we  may  hope  that 
this  conference  will  he  unanimous  in  recommending  publicity. 

What  objection  can  there  be  to  publicity?  We  are  told  that 
corporate  management  is  private  business.  This  certainly  is  not 
true  of  corporations  engaged  in  operating  public  franchises. 
Such  corporations  are  government  agencies,  and  the  right  of  the 
people  to  full  information  concerning  the  operations  of  public 
agencies  cannot  be  questioned  under  a  republican  form  of  gov- 
ernment. Corporations  of  every  kind  are  created  for  the  purpose 
of  encouraging  industry  and  promoting  prosperity.  Wherever 
they  become  engines  of  fraud  or  oppression  they  are  perverted  . 
from  their  original  purposes.  Secrecy  being  the  source  of  evil, 
publicity  is  its  natural  antidote.  An  officer  of  a  corporation  acts 
not  for  himself,  but  for  others.  Whoever  acts  for  others  will  not 
shun  publicity  but  court  it,  if  his  conduct  be  governed  by  honesty. 
The  desire  for  secrecy  is  the  infallible  badge  of  fraud.  The  pre- 
tense that  publicity  would  injure  the  interests  of  stockholders  is  a 
device  to  plunder  them.  Under  the  cloak  of  secrecy  stockholders 
have  been  robbed  quite  as  extensively  as  the  people  have  been 
oppressed.  No  man  who  seeks  to  render  another  a  service  fears 
the  light  of  day.  It  is  only  the  rogue  who  seeks  the  cover  of  dark- 
ness for  his  operations.  Whenever  any  person  seeks  to  lure  you 
up  a  dark  alleyway  on  the  pretense  that  he  wants  to  serve  you,  be 
sure  that  he  means  to  cheat  you.  Do  not  parley  with  him  for  a 
moment.  Call  a  policeman  on  the  spot  if  you  want  to  preserve 
your  property  and  your  character. 

The  final  argument  in  favor  of  publicity  as  a  remedy  for  cor- 
porate misconduct  of  every  character  is  its  simplicity.  It  is  not  a 
suggestion  of  new  laws,  but  of  more  efficient  machinery  to  en- 
force existing  laws.  Before  leaving  this  branch  of  the  subject  I 
will  venture  to  outline  a  system  for  securing  such  publicity  of  cor- 
porate administration  as  would  effectively  prevent  favoritism  to  . 
individuals,  oppression  of  the  public,  and  fraud  on  the  corpora- 
tions themselves. 

Every  person  using  a  public  facility  should  have  the  right  to 
know  the  terms  on  which  the  same  service  is  enjoyed  by  every 
other  person.  Every  stockholder  should  have  the  right  to  ex- 
amine the  books  of  a  corporation  and  to  learn  every  detail  of  its 
operation.  If  it  be  objected  that  to  allow  the  holder  of  a  single 
*hare  in  a  corporation  capitalized  for  millions,  to  examine  its 
books  at  pleasure,  would  disturb  its  business,  the  answer  is  sim- 
ple. If  a  corporation  doesn't  want  a  great  number  of  stockhold- 
ers it  need  not  have  them.  It  has  but  to  divide  its  capital  stock 

473 


into  shares  of  five  hundred  or  a  thousand  or  ten  thousand  dollars 
each  in  order  to  reduce  the  number  of  its  shareholders.  Cor- 
porations divide  their  stock  into  a  great  number  of  shares  because 
it  is  easier  to  raise  money  from  many  persons  contributing  each 
a  small  sum,  than  from  a  few  persons  each  contributing  a  large 
amount.  If  the  corporation  enjoy  the  advantage  of  such  a  subdi- 
vision of  its  capital,  it  should  accept  a  corresponding  responsi- 
bility to  every  individual  shareholder.  Indeed,  under  existing 
laws,  every  stockholder  has  a  right  to  examine  the  books  of  a  cor- 
poration, if  the  courts  would  enforce  it.  In  this  respect  the  only 
new  legislation  necessary  is  an  act  compelling  the  courts  to  grant 
as  a  matter  of  right,  what  to-day  they  grant  as  a  matter  of  discre- 
tion. 

Every  corporation  should  be  compelled  to  file  with  the  secre- 
tary of  state  at  its  organization  a  statement  of  all  the  property, 
franchises,  goodwill,  and  assets  of  every  description  on  which  its 
capitalization  is  based. 

It  should  be  compelled  to  make  a  full  report  every  year  of  all 
its  business  to  some  department  of  the  state.  This  is  the  law  to- 
day in  nearly  every  state,  but  I  believe  that  it  is  evaded  in  all  of 
them.  The  reports  are  invariably  misleading,  when  they  are  not 
incomprehensible.  It  would  not  be  difficult  to  make  provision 
for  such  clear,  specific  statements  as  would  enable  everybody  to 
understand  the  exact  financial  condition  of  every  company  doing 
business  under  a  corporate  charter.  The  public  could  then  esti- 
mate the  value  of  its  shares  and  no  man  need  be  defrauded,  no 
matter  what  its  nominal  capitalization  might  be. 

The  powers  now  exercised  in  almost  every  state  by  the  depart- 
ment of  insurance  and  the  department  of  banking  should  be 
extended  so  as  to  make  it  the  duty  of  some  public  authority  to 
examine  the  condition  of  every  corporation,  to  scrutinize  its  opera- 
tion, and  to  institute  criminal  proceedings  against  any  officers 
attempting  to  practice  fraud  or  concealment  in  preparing  the 
reports  exacted  by  law.  The  failure  to  place  the  law  in  motion 
against  them  would  then  be  accepted  by  the  public  as  proving  the 
honesty  of  their  management. 

Finally  the  violation,  evasion  or  disregard  of  any. of  these  pro- 
visions should  be  punished  by  long  terms  of  imprisonment. 
Where  great  sums  are  to  be  gained  by  disobeying  the  law,  fines 
will  not  secure  obedience  to  it.  Under  such  circumstances  fines 
are  too  often  regarded  as  mere  taxes  on  financial  operations,  to 
be  collected  subsequently  from  the  public. 

With  these  simple  remedies  prescribed  and  rigidly  enforced, 
no  form  of  corporate  corruption  or  oppression  could  be  practiced, 

474 


and  I  promise  you  that  when  honesty  governs  corporate  officers 
the  distrust  and  dislike  of  corporations  now  so  general  will  dis- 
appear from  the  minds  of  a  liberty-loving  people,  who  are  always 
seeking  justice  even  through  their  prejudices. 

In  prescribing  the  limits  of  publicity  a  distinction  must  be  ob- 
served between  corporations  which  enjoy  no  favor  from  the  state, 
except  the  right  to  do  business  under  corporate  forms,  and  those 
specially  chartered  to  perform  public  functions.  To  compel  a 
private  corporation  to  disclose  its  processes  of  manufacture  would 
be  to  confiscate  its  property.  The  methods  by  which  such  a  cor- 
poration conducts  its  business  concerns  itself  alone;  the  results 
of  its  business,  that  is  to  say,  the  nature  and  extent  of  its  prop- 
erty, concerns  the  public;  they  should  be  disclosed  so  that  the 
people  to  whom  its  shares  are  offered  could  form  an  intelligent 
judgment  of  their  value. 

Corporations  exercising  public  functions  should  have  no  se- 
crets whatever.  They  are  public  agencies.  Every  feature  of  their 
possessions,  every  detail  of  their  administration  should  be  public 
property. 

I  have  discussed  government  interference  with  the  affairs  of 
the  citizen  at  this  length  because  I  want  it  understood  that  to 
monopoly  dependent  upon  government  favor  in  any  shape  OP  form 
I  am  as  firmly  opposed  as  any  gentlemen  in  this  body — even  from 
Texas.  I  confess  that  I  envy  Texas  its  breezy  rhetoric,  when  I 
want  to  denounce  that  form  of  government  oppression.  But, 
my  friends,  when  we  come  to  consider  an  industrial  organiza- 
tion which  dominates  the  market  not  through  government  favor 
but  through  the  cheapness  of  its  product,  we  are  face  to  face  with 
a  force  in  production  which  is  of  a  radically  opposite  character. 

To  denounce  any  organization  as  a  trust  or  a  monopoly  is 
neither  to  state  an  objection  to  it  nor  to  suggest  a  method  of 
dealing  with  it.  Avoiding  the  use  of  all  such  exciting  and  mis- 
leading phrases,  I  will  state  simply  that  any  form  of  industrial 
organization  which  cheapens  a  commodity  necessary  to  my  com- 
fort commends  itself  to  my  approval.  I  confess  that  I  would 
rather  pay  forty  dollars  for  a  good  suit  of  clothes  to  a  large  in- 
dustrial organization,  than  fifty  dollars  for  an  inferior  suit  of 
clothes  to  an  individual  dealer.  Now,  this  may  be  a  confession  of 
total  depravity.  If  it  be,  ladies  and  gentlemen,  I  hope  you  will 
regard  the  candor  which  impels  the  confession  as  some  extenua- 
tion of  the  offense.  I  am  so  constituted  that  I  prefer  good  serv- 
ice to  bad  service,  and  I  cannot  quarrel  with  any  organization  or 
system  which  improves  my  condition,  even  though  you  call  it  a 
monopoly.  Monopoly  is  a  word  which  suffers  from  a  very  bad 

475 


name,  and  deservedly  so.  It  has  been  associated  for  ages  with 
the  very  worst  form  of  governmental  practice.  During  nearly  al  1 
the  history  of  the  world,  indeed,  I  may  say  until  this  generation, 
monopoly  meant  control  of  the  market  by  some  favorite  of  the 
government  through  a  patent  conferring  upon  him  the  exclusive 
right  to  deal  in  certain  articles  of  general  consumption.  This  was 
practically  a  license  to  prey  upon  the  necessities  of  the  com- 
munity. In  operation  it  led  to  such  abuses,  oppressions  and  in- 
famies, that  the  word  used  to  describe  it  very  naturally  acquired 
an  evil  significance,  which  to  this  day  awakens  the  indignation 
of  every  justice-loving  freeman. 

I  do  not  believe  there  is  an  organization  doing  business  in  this 
country  without  government  favor  which  can  be  called  a  monop- 
oly, in  any  fair  interpretation  of  that  term.  The  Standard  Oil 
Company,  which  is  generally  deemed  a  monopoly,  supplies  only 
about  62  per  cent  of  all  the  oil  consumed  in  this  country.  Such 
concerns  have  been  described  here  as  "partial  monopolies/'  I 
confess  I  am  unable  to  understand  that  term.  A  "partial  mo- 
nopoly" is  about  as  intelligible  an  expression  as  a  "partial  whole." 
It  seems  to  me  corporations  of  this  character  would  be  better 
described  as .  dominating  industrial  enterprises,  than  as  mo- 
nopolies. Each  may  be  said  to  dominate  the  market  for  its  prod- 
uct, because,  although  it  does  not  furnish  the  total  amount  con- 
sumed, it  does  furnish  the  larger  proportion  of  it.  However,  I 
will  not  quarrel  with  words.  I  don't  object  to  the  institution 
which  gives  me  clothes  or  food  the  cheapest,  even  if  you  call  it  a 
monopoly.  I  care  little  about  the  terms  in  which  it  may  be 
described,  while  I  am  deeply  concerned  in  the  service  which  it 
renders. 

Let  us  examine  the  objections  to  these  industrial  enterprises 
which  through  aggregations  of  capital  or  efficiency  of  manage- 
ment, or  any  other  cause  independent  of  government  favor  are 
able  to  dominate  the  market.  It  is  said  such  an  organization  de- 
stroys competition,  but  this  is  manifestly  illogical.  It  does  not 
destroy  competition;  it  is  itself  the  inevitable  fruit  of  competi- 
tion. It  is  not  possible  to  have  competition  without  competitors, 
and  if  there  be  competitors,  one  must  prevail.  Where  a  number 
of  persons  engaged  in  the  manufacture  of  shoes,  or  cloth,  or  ma- 
chinery, compete  in  a  perfectly  open  field,  and  one  succeeds  in 
producing  his  commodity  cheaper  than  the  others,  and  offers  it 
to  the  public  at  a  lower  price,  he  will  always  be  the  first  to  dis- 
pose of  his  product.  "While  he  can  supply  the  demand  no  one 
will  pay  a  higher  price  for  the  same  article  to  another  producer. 
He  will  therefore  have  a  monopoly.  He  who  sells  cheapest  must 

476 


always  dominate  the  market,  for  in  economics  the  domination  of 
the  cheapest  is  the  survival  of  the  fittest.  If  the  man  who  pre- 
vails in  the  competition  is  not  allowed  to  enjoy  the  fruit  of  his 
victory,  that  is  to  say,  the  control  of  the  market,  he  will  not  com- 
pete; nobody  else  will;  and  then  there  will  be  no  competition 
whatever. 

The  competition  of  men  in  any  department  of  human  endeav- 
or, if  it  be  absolutely  free,  always  develops  excellence.  But  ex- 
cellence is  monopoly.  It  would  not  be  excellence  if  it  were  not. 
Surely  you  would '  not  call  that  excellence  which  is  shared  by 
many.  As  the  producer  of  the  best  commodity  must  dominate 
the  market  for  his  product,  so  will  the  possessor  of  conspicuous 
excellence  dominate  any  other  field  of  endeavor.  At  the  bar 
the  most  capable  lawyer  obtains  the  best  clients.  In  medicine 
the  most  skillful  physician  obtains  the  most  desirable  patients; 
in  literature  the  best  writer  obtains  the  widest  circulation;  each 
dominates  his  calling  and  in  that  sense  he  is  a  monopoly.  The 
leading  orator  always  draws  the  largest  audiences, — indeed, 
there  is  a  gentleman  here  present  who  in  this  respect  is  an  abso- 
lute monopoly,  as  many  of  us  know  to  our  cost  who  have  attempt- 
ed to  divide  public  attention  with  him. 

Ladies  and  gentlemen,  I  am  reminded  by  the  presence  of  the 
gentleman — whose  name  has  evoked  this  great  demonstration, 
as,  indeed,  it  provokes  enthusiasm  everywhere — that  his  promi- 
nence is  itself  the  direct  result  of  free  competition,  and  the  most 
striking  illustration  of  its  essential  tendency. 

Three  years  ago  a  convention  met  in  this  town,  and  as  the 
great  majority  of  delegates  were  strangers  to  each  other,  a  few 
among  them  who  had  already  attended  many  similar  gatherings, 
hoped  through  their  wider  acquaintance  to  manage  its  proceed- 
ings and  to  control  its  conclusions.  They  succeeded  in  directing 
its  preliminary  stages,  but  differences  over  the  platform  led  to  a 
struggle  so  fierce  that  each  side  was  compelled  to  call  on  its 
strongest  champions.  Factional  exigencies  thus  threw  the  debate 
open  to  free  competition,  and  a  young  man  unknown  to  the  ma- 
jority, so  ojitshone  all  rivals  that  in  an  instant  he  was  lifted  upon 
the  shoulders  of  shouting,  excited  delegates  into  the  absolute 
and  unoLuestioned  leadership  of  his  party. 

The  views  which  he  represented  were  not  mine,  but  without 
undertaking  to  discuss  their  soundness  everybody  must  admit 
that  the  leadership  most  capable  of  expounding  and  maintaining 
them  was  developed  from  the  open  competition  of  that  debate. 
While  the  convention  was  controlled  by  the  management,  as  it 
was  during  its  preliminary  proceedings,  that  young  man  could  not 


have  been  chosen  a  temporary  officer.  It  was  then  a  field  of  re- 
stricted competition  in  which  prominence  was  to  be  achieved  not 
by  ability  but  b}r  the  favor  of  the  leaders.  When  it  became  a  field 
of  free  competition,  its  leadership  passed  to  the  man  who  had 
shown  himself  able  beyond  all  others  to  voice  its  hopes  and  to  de- 
fend its  opinions. 

Wherever  free  competition  prevails,  pre-eminence  must  be 
achieved  as  Mr.  Bryan  achieved  it — by  shining  and  conspicuous 
merit  in  that  particular  field.  And  the  preeminence  established 
by  merit  must  be  maintained  by  merit.  The  lawyer  must  estab- 
lish eminence  and  maintain  it  by  excellence  in  advocacy;  the 
physician  by  skill  in  checking  the  ravages  of  disease;  the  orator 
by  supporting  the  popular  side  of  every  public  question,  with  the 
most  persuasive  arguments,  clothed  in  the  most  attractive  words, 
just  as  the  successful  producer  must  maintain  his  control  of  the 
market  by  affording  the  public  at  all  times  the  best  article  at  the 
lowest  price. 

If,  however,  prominence  at  the  bar  depend  on  the  favor  of  the 
court,  the  leading  lawyer  will  not  be  the  man  who  excels  in 
forensic  ability,  but  the  one  who  is  most  proficient  in  the  base  and 
servile  arts  of  the  courtier.  If  patients  must  be  secured  through 
social  influences,  the  leading  physician  will  not  be  the  man  who 
labors  most  assiduously  in  the  laboratory  or  the  hospital,  but  the 
one  who  cultivates  most  successfully  the  favor  of  the  drawing- 
room;  if  the  largest  audiences  must  be  secured  through  flatter- 
ing the  follies  of  the  crowd,  the  leading  orator  will  not  be 
the  man  who  displays  the  most  eloquence  in  defense  of  triith, 
but  the  one  who  shows  the  greatest  aptitude  for  the  wiles  of  the 
demagogue.  If  the  control  of  the  market  depend  on  the  favor  of 
government,  the  successful  manufacturer  will  not  be  the  man 
who  excels  in  production,  but  the  one  who  excels  in  corruption. 

The  same  enlightened  sense  of  interest  that  impels  us  to  de- 
fend monopoly  based  upon  excellence,  should  lead  us  to  over- 
throw monopoly  based  upon  favor,  because  while  free  competi- 
tion leads  to  the  domination  of  the  best,  restricted  competition  de- 
velops the  domination  of  the  baser,  if  not  of  the  basest. 

It  is  objected,  however,  to  the  great  industrial  combinations 
which  dominate  the  market  through  the  cheapness  of  their  prod- 
ucts, that  their  success  in  serving  the  public  operates  to  throw 
men  out  of  employment.  To  this  there  are  two  answers.  First, 
it  is  not  true,  and  in  the  second  place,  if  the  statement  were  true, 
it  would  not  be  a  sufficient  reason  for  suppressing  an  industrial 
development  of  great  benefit  to  the  body  of  the  community  that  it 
worked  hardship  to  a  few  individuals.  The  man  who  says  that 

478 


any  system  of  organization  deprives  him  of  employment  because 
he  cannot  compete  with  it  successfully,  admits  that  somebody 
else  can  perform  his  job  better  than  he  can,  and  if  that  be  so  he 
should  be  ready  to  surrender  it. 

It  has  been  said  here  by  one  gentleman  that  these  combina- 
tions of  capital  have  been  so  effective  that  thirty-five  thousand 
commercial  travelers  are  no  longer  necessary  to  the  sale  of  com- 
modities. We  have  no  particular  evidence  that  his  statistics 
are  accurate,  "and  we  must  take  his  word  for  the  statement  that 
his  single  voice  expressed  the  feelings  of  such  a  multitude.  Sup- 
pose it  to  be  true,  must  we  hold  back  the  car  of  progress  until 
every  human  being  can  get  aboard?  If  so  we  must  diminish  its 
speed  from  the  rate  of  the  lightning  express  to  that  of  the  lum- 
bering ox-wagon.  It  seems  to  me  it  would  be  cheaper  for  the  com- 
munity to  pension  middlemen  directly  from  the  treasury  than  to 
restrict  the  efficiency  of  the  capable  in  deference  to  the  lamenta- 
tions of  the  incapable.  I  may  add  that  until  there  ;s  a  prospect 
of  a  pension,  I  doubt  very  much  whether  we  could  find  thirty- 
five  thousand  unemployed  commercial  travelers  in  the  country. 
I  know  of  nothing  that  prolongs  life  or  multiplies  a  species  so 
effectively  as  a  pension  or  a  prospect  of  a  pension. 

As  a  matter  of  fact,  industrial  organizations  which  increase 
production  have  never  thrown  anybody  out  of  employment  even 
for  an  hour,  and,  in  the  nature  of  things,  they  never  can.  Pro- 
duction has  never  been  increased  without  increasing  the  number 
of  hands  engaged  in  it,  and  to  increase  the  number  of  laborers 
cannot  operate  to  throw  anyone  out  of  employment. 

A  period  of  industrial  transition  is  always  a  period  of  appre- 
hension, vociferously  expressed  but  never  realized.  While  the 
substitution  of  steam  for  hand  labor  was  impending,  loud  lamen- 
tations were  heard  on  all  sides  from  laborers  who  believed  that  it 
meant  their  ruin.  After  it  had  been  effected,  nobody  was  found 
to  be  injured  and  everybody  realized  that  he  had  been  benefited. 

While  the  application  of  machinery  to  manufacturing  was 
in  course  of  preparation  and  before  it  was  completed,  operatives  of 
every  description  bemoaned  their  fate,  believing  the  change 
would  reduce  them  all  to  starvation.  The  cobbler  in  his  cellar, 
the  weaver  in  his  back  room,  both  believed  that  the  scanty 
crusts  on  which  they  supported  existence,  would  be  filched  from 
their  mouths  by  this  new  force  in  production.  Now  the  only  way 
by  which  machinery  displaced  hand  labor  was  by  placing  goods 
in  greater  abundance  on  the  market,  that  is  to  say,  at  cheaper 
rates.  But  to  make  these  goods  human  hands  were  necessary, 
and  no  hands  were  so  efficient  as  those  which  had  already  acquired 

479 


familiarity  with  the  articles  to  he  manufactured.  Hence  the  first 
person  employed  to  operate  the  machine  for  making  shoes  was  the 
cobbler  who  had  dreaded  its  advent.  The  first  to  manage  the 
steam  loom  was  the  weaver  who  had  believed  it  would  be  the  en- 
gine of  his  destruction.  The  cobbler  was  displaced  from  his  cel- 
lar by  himself,  and  the  weaver  from  his  back  room  by  himself, — 
each  was  taken  from  miserable,  fetid,  degraded  surroundings  into 
a  well-lighted,  wholesome  factory,  where  he  earned  better  wages\ 
and  where  in  a  short  time  he  organized  unions  and  demanded 
still  better  wages. 

The  stage  coach  drivers  believed  to  a  man  that  the  establish- 
ment of  railroads  would  deprive  them  all  of  occupation,  but  as  a 
matter  of  fact,  railroads  from  the  first  hour  of  their  operation 
increased  the  demand  for  drivers.  By  the  time  the  railroad  had 
reached  such  a  degree  of  efficiency  as  to  preclude  competition 
with  the  stage  coach  the  necessity  of  distributing  the  greatly  in- 
creased traffic  in  passengers  and  merchandise  from  railroad  sta- 
tions had  created  a  wider'  demand  for  drivers  and  horses  than 
had  ever  been  known  before.  It  is  quite  true  that  occasionally 
a  man  who  had  been  accustomed  to  drive  a  coach  with  four  horses 
thought  there  would  be  some  loss  of  dignity  in  consenting  to  drive 
a  less  splendid  but  more  useful  vehicle  drawn  by  one  or  two  horses, 
even  at  better  wages,  but  surely  it  would  not  be  contended  that 
the  progress  of  the  human  race  should  have  been  blocked  out  of 
sympathy,  not  for  the  necessities,  but  for  the  vanity  of  an  occa- 
sional stage  coach  driver. 

And  so  I  take  leave  to  doubt  the  statement  that  thirty- 
five  thousand  commercial  travelers  havr  been  reduced  to 
idleness  by  increased  efficiency  in  business  management.  The 
object  of  consolidating  corporations  must  be  to  increase  sales. 
But  an  increase  of  sales  involves  an  increase  in  salesmen,  and  as 
these  commercial  travelers  are  considered  the  best  salesmen,  they 
will  be  the  first  beneficiaries  of  the  change.  Of  course,  I  speak 
of  those  who  promptly  seek  employment  under  the  new  system, 
not  of  those  who  spend  their  days  bemoaning  discarded  methods. 

It  has  been  said  that  competition  is  cruel,  pitiless,  and  de- 
structive. Our  friend,  the  socialist,  whose  interesting  addre?s 
delivered  this  morning  should  make  his  name  familiar  throughout 
the  country  declared  that  competition  was  warfare.  Let  me  pro- 
test against  that  statement.  Competition  is  not  warfare  in  the 
sense  of  being  destructive.  Competition  is  the  best  method  of  as- 
certaining the  place  of  greatest  utility  for  each  individual.  Be- 
lieve me,  every  man  has  special  aptitude  for  some  occupation.  A 
man  who  is  defeated  in  one  field  of  competition  is  not  excluded 

480 


from  the  whole  field  of  production,  but  he  is  transferred  from  a 
field  of  lesser  to  a  field  of  greater  efficiency.  Competition  pre- 
vents a  misdirection  of  powers.  A  man  qualified  to  be  a  farmer 
might  wish  to  be  a  lawyer.  Competition  by  depriving  him  of 
bread  if  he  persisted  in  following  a  profession  in  which  he  would 
be  useless,  drives  him  to  agriculture,  where  he  enjoys  greater 
chances  for  achieving  prosperity  and  efficiency. 

A  few  days  ago,  in  the  waters  around  New  York,  a  number  of 
boats  competed  for  the  honor  of  defending  America's  cup  against 
the  foreign  challenger.  In  that  competition  the  Columbia  was 
successful.  Did  they  break  up  the  Defender  as  useless  because 
another  by  outsailing  her  had  excluded  her  from  the  international 
races?  No,  the  Defender  is  retired  from  that  particular  field,  but 
one  of  wider  usefulness  is  open  to  her.  She  will  cease  to  be  a  rac- 
ing craft,  but  she  will  remain  a  swift  and  useful  boat.  She  will 
join  the  Puritan,  the  Vigilant,  and  the  other  vessels  which 
formerly  were  champions,  but  which  are  now  ministering  to  the 
pleasures  and  the  necessities  of  men.  This  competition  has  not 
caused  the  destruction  of  any  craft.  It  has  assigned  each  to  the 
field  in  which  it  will  be  most  useful,  while  it  has  determined  the 
one  which  in  point  of  speed  is  best  fitted  to  defend  for  our  coun- 
try the  trophy  she  has  held  so  long  of  supreme  excellence  in  mak- 
ing ships  and  in  sailing  them. 

Attempts  to  excel  otherwise  than  by  superiority  are  not  com- 
petition, although  that  word  is  often  used  to  describe  them.  If 
in  that  preliminary  competition  of  boats  which  I  have  men- 
tioned, one  of  them  had  undertaken  to  succeed  by  fouling,  that  is 
to  say,  by  running  into  another,  or  if  an  industrial  organization 
undertook  to  outstrip  a  rival  by  throwing  obstacles  in  the  access 
of  its  product  to  the  market, — by  imposing  penalties  on  retail  mer- 
chants who  offered  its  goods  to  the  public, — or  by  any  means  what- 
ever except  the  superiority  of  its  product, — it  would  not  be  en- 
gaged in  a  competition,  but  in  a  conspiracy  to  prevent  competi- 
tion. 

If  predominance — monopoly — call  it  what  you  will,  resting  on 
excellence  be  reprehensible,  how  are  we  to  prevent  it?  The  dis- 
tance between  excellence  and  mediocrity  can  be  obliterated  only 
by  reducing  the  superior  to  the  level  of  the  inferior.  The  process 
cannot  be  reversed.  It  is  impossible,  bv  any  device  of  legislation, 
to  make  the  unskillful  equal  to  the  skillful  man,  but  it  is  entirely 
possible  for  government  to  limit  the  efficiency  of  the  skillful  by 
hampering  his  industry.  But  if  it  be  advisable  to  obliterate  the 
difference  between  efficiency  and  inefficiency  in  material  produc- 
tion, it  must  be  equally  advisable  to  obliterate  distinctions  be- 

481 


tween  capacity  and  incapacity  in  other  fields  of  human  endeavor. 
If  I  must  be  prevented  from  obtaining  a  good  suit- of  clothes  from 
a  large  concern  for  thirty  dollars  and  forced  to  pay  fifty  dollars 
for  an  inferior  suit  to  a  smaller  but  less  efficient  dealer  merely  to 
maintain  him  in  business,  why  should  a  litigant  be  allowed  to 
employ  the  best  lawyer  while  a  number  of  inferior  lawyers  are 
eager  for  the  retainer  and  ready  to  give  everything  in  return  for 
it  except  equally  good  advice?  Why  should  a  sufferer  be  per- 
mitted to  consult  the  leading  physician  while  the  neighborhood 
abounds  with  practitioners  less  skillful,  but  fully  as  virtuous,  and 
who  are  ready  to  experiment  on  his  system  with  greater  enthusi- 
asm, though  probably  with  less  success?  Why  should  the  leading 
orator  be  allowed  to  crowd  the  largest  hall  with  delighted  audi- 
tors, while  hundreds  of  others  equally  patriotic  are  bursting  with 
noble  sentiments  to  which  nobody  will  listen? 

If  the  preeminence  or  monopoly  of  merit  be  reprehensible  in 
itself,  every  attempt  to  establish  it  must  be  equally  reprehensible. 
If  it  be  wrong  for  a  manufacturer  to  strive  for  control  of  the  mar- 
ket by  the  superiority  of  his  product,  it  must  be  equally  wrong  to 
contend  for  preeminence  in  the  learned  professions.  Must  the 
capable  lawyer,  then,  sacrifice  a  certain  number  of  cases  deliber- 
ately,— that  is  to  say, — betray  a  certain  number  of  his  clients, — 
lest  he  excel  the  incapable  attorneys  who  lose  causes  through 
stupidity?  Must  the  physician  who  possesses  skill  use  it  to  destroy 
a  few  lives,  lest  he  be  more  successful  than  others  who  destroy 
them  through  lack  of  skill?  Must  the  leading  orator  reduce  the 
splendor  of  his  periods  lest  he  outshine  duller  speakers? 

If  we  are  to  suppress  monopoly  resting  on  excellence  we  must 
begin  by  suppressing  the  excellence  which  establishes  it,  and  this 
would  be  to  arrest  all  human  improvement. 

To  ascertain  conclusively  the  effect  of  any  industrial  system 
upon  the  condition  of  a  country,  we  must  examine  its  effect  on 
wages.  In  my  judgment,  there  is  but  one  test  of  prosperity  ab- 
solutely infallible,  and  that  is  the  rate  of  wages  paid  to  labor.  I 
beg  you  to  believe  that  this  statement  is  not  made  through  any 
profession  of  special  love  for  the  man  who  works  with  his  hands. 
I  don't  claim  to  hold  the  laborer  in  any  greater  affection  than  the 
lawyer,  or  the  doctor,  or  even  the  capitalist.  I  say  the  condition 
of  the  laborer  in  any  country  is  an  infallible  test  of  its  prosperity, 
because  wages,  being  that  part  of  his  own  product  which  the 
laborer  receives  in  compensation  for  his  toil,  it  is  plain  that  the 
more  he  produces,  the  greater  the  fund  from  which  he  draws  his 
compensation.  If  a  laborer  engaged  in  making  chairs  produce 
five  chairs  worth  twenty  dollars  every  day,  and  his  wages  be  four 

482 


dollars  a  day,  the  rate  of  his  compensation  is  equivalent  to  one- 
fifth  of  his  product.  In  effect  he  receives  one  chair  out  of  the 
five  which  he  produces.  Instead  of  taking  home  with  him  every 
day  a  chair  which  he  could  not  divide  among  the  various  persons 
on  whom  he  depends  for  the  necessaries  of  life,  he  takes  its 
equivalent  in  money,  which  he  can  divide,  that  is  to  say,  he  takes 
four  dollars.  If  by  an  increase  in  his  own  efficiency,  by  a  better 
system  of  organization,  or  any  other  cause,  that  laborer  produced 
ten  chairs  every  day  instead  of  five,  and  his  wages  were  still  a  fifth 
of  his  product  he  would  receive  two  chairs  or  eight  dollars  a  day. 
The  difference  between  the  larger  product  and  the  amount  of  his 
wages  being  thirty-two  dollars,  while  the  difference  between  the 
smaller  product  and  his  wages  was  but  sixteen  dollars,  it  is  clear 
that  the  more  highly  he  is  paid  the  greater  the  profit  of  his  em- 
ployer. This  explains  why  those  industries  are  the  most  pros- 
perous in  which  the  highest  rate  of  wages  prevails. 

But  the  laborer  cannot  increase  his  own  product  without  caus- 
ing an  increase  in  the  production  of  others.  An  increase  in  the 
production  of  chairs  involves  a  corresponding  increase  in  the  pro- 
duction of  all  the  articles  that  enter  into  its  manufacture,  in  the 
production  of  lumber,  of  glue,  and  of  tools.  Nor  is  this  all.  The 
manufacturer  would  not  increase  the  production  of  chairs  without 
an  increase  in  the  demand  for  them.  Demand  for  an  article  in 
the  economic  sense  does  not  mean  a  mere  desire  for  it.  It  means 
that  people  are  ready  to  offer  other  commodities  in  exchange  for  it. 
An  increase  in  the  production  of  one  article  would  be  unprofitable 
unless  there  be  a  corresponding  increase  in  the  production  of  other 
articles.  Abundance  of  chairs  would  not  profit  me  if  there  be 
not  an  abundance  of  clothes,  an  abundance  of  shoes,  an  abundance 
of  tables,  and  other  things  which  could  be  exchanged  for  them. 
Abundance,  therefore,  is  impossible,  -unless  it  is  general.  An 
abundance  of  commodities  necessarily  causes  an  extensive  demand 
for  labor  to  produce  them.  An  extensive  demand  for  labor 
always  causes  a  high  rate  of  wages,  and  that  is  what  I  meant  when 
I  said  in  the  beginning  that  there  cannot  be  abundant  produc- 
tion of  commodities  without  an  extensive  distribution  in  the  form 
of  wages. 

As  it  is  impossible  to  increase  profits  and  at  the  same  time 
lower  the  price  of  a  product  in  any  other  way  than  by  increasing 
the  volume  of  production  and  as  an  increase  in  the  volume  of  pro- 
duction must  increase  the  rate  of  wages,  all  industrial  combina- 
tions which  operate  to  lower  prices;  or,  in  other  words,  those 
which  flourish  through  excellence  are  powerful  forces  to  promote 
the  general  prosperity. 

483 


Mr.  Gompers  said  to-day  that  the  movement  of  industry  has 
steadily  tended  to  a  higher  rate  of  wages,  and  I  am  glad  to  concur 
in  that  statement.  The  movement  of  wages  is  upward  and  must 
be  upward  under  the  immutable  laws  governing  production. 
Any  discussion  of  wages  would  be  incomplete  which  did  not  em- 
brace the  effect  of  Trades  Unions  on  industry,  and,  therefore,  if 
you  will  bear  with  me  I  will  say  a  few  words  on  that  subject. 
What  I  am  about  to  say  will  sound  strange  to  most  of  you.  It 
may  perhaps  shock  a  great  many  who  approved  what  I  have  said 
before,  but  with  opinions  an  honest  man  must  do  one  of  two 
things — express  them  or  change  them.  I  can't  change  mine,  so  I 
must  express  them  and  explain  them.  Labor  unions,  in  my  judg- 
ment, have  no  direct  effect  whatever  upon  the  rate  of  wages.  I  am 
aware  this  proposition  conflicts  with  an  opinion  which  is  almost 
universal,  yet,  I  believe  it  will  be  justified  by  a  very  slight  ex- 
amination of  economic  laws.  I  do  not  mean  by  this  to  say  that 
trades  unions  have  not  exercised  a  great,  even  a  decisive,  influence 
on  social  conditions.  They  are  the  most  effective  agencies  yet 
discovered  for  facilitating  the  intercourse  between  employers  and 
employes  concerning  the  conditions  of  their  common  industry. 
The  loyal  discharge  of  this  function  helps  to  maintain  industrial 
peace,  upon  which  depends,  in  a  large  degree,  the  industrial 
efficiency  through  which  this  republic  is  destined  to  exercise  a 
wider,  a  better,  and  a  more  lasting  influence  upon  mankind  than 
the  great  republic  of  antiquity.  The  rate  of  wages,  however, 
does  not  depend  on  agreements  between  employers  and  employees 
or  upon  concessions  by  one  to  the  other.  It  is  fixed  by  immut- 
able laws  which  neither  the  employer  nor  the  employee  nor  both 
combined  could  disturb.  The  wages  of  the  laborer  depends  on 
the  value  of  his  product  and  nothing  else. 

The  employer  cannot  pay  the  laborer  any  more  than  the  value 
of  his  product  and  he  cannot  pay  him  any  less.  Eecurring  to 
the  illustration  of  the  chair,  it  must  be  plain  that  if  I  undertook 
to  pay  the  laborer  who  finished  it  any  more  than  the  value  of  his 
product,  in  a  very  short  time  I  would  be  reduced  to  bankruptcy, 
when  I  would  be  unable  to  give  him  any  employment  or  pay  him 
any  wages  whatever.  If  I  succeeded  in  inducing  him  to  accept 
less  than  the  value  of  his  product,  the  onlv  effect  would  be  an  in- 
crease in  my  profits.  But  if  capital  engaged  in  the  chair-making 
industry  showed  unusual  profits,  other  capital  would  be  attracted 
to  it  from  different  fields  of  industry.  It  would  compete  with  my 
capital.  Its  competition  would  take  the  form  of  drawing  away 
the  best  laborers  by  offering  higher  wages.  I  must  meet  this 

484 


competition  by  offering  equally  high  wages  or  I  must  abandon  the 
industry. 

The  standard  of  wages  then  is  fixed  by  two  forces  acting  on 
each  other;  the  competition  of  laborers  for  employment,  operat- 
ing to  make  wages  lower,  and  the  competition  of  capital  for  profit 
operating  to  make  wages  higher.  It  may  seem  strange  to  many, 
but  it  is  nevertheless  true  that  the  competition  of  capital  for  profit 
is  keener  than  the  competition  of  laborers  for  employment,  be- 
cause it  is  easier  and  cheaper  for  capital  to  move  from  place  to 
place  in  search  of  higher  profit  than  for  a  laborer  to  seek  a  field 
of  higher  wages. 

It  would  cost  a  laborer  at  least  fifteen  dollars  to  move  from 
Chicago  to  New  York,  but  you  can  send  millions  of  dollars  from 
Chicago  to  Hong  Kong  for  a  postage  stamp.  It  would  take  a 
laborer  two  days  to  go  from  here  to  Boston,  but  you  can  send  any 
amount  of  capital  to  the  other  side  of  the  globe  in  an  instant  by  a 
cable  dispatch.  Moreover,  capital  has  no  family  affections;  it 
is  indifferent  to  climate;  all  languages  are  alike  to  it.  But  the 
laborer  has  domestic  ties  deeply  implanted  in  the  fibers  of  his 
being  which  none  but  very  powerful  motives  can  induce  him  to 
disturb.  It  is  doubtful  if  a  difference  of  15  per  cent  in  the  rate 
of  wages  would  be  enough  to  cause  a  movement  of  laborers  from 
Chicago  to  New  York,  but  a  difference  of  an  eighth  of  1  per  cent 
in  the  rate  of  interest  would  start  capital  all  round  the  world. 

The  competition  of  capital  for  profit  being  keener  than  the 
competition  of  laborers  for  employment,  the  force  which  operates 
to  advance  wages  is  stronger  than  that  which  operates  to  lower 
them;  the  result  is  a  steady  rise  in  the  rate  of  wages,  and  a  steady 
fall  in  the  rate  of  interest. 

Wages  being  fixed  by  the  operation  of  these  two  forces,  it  is 
plain  that  the  rate  cannot  be  determined,  altered  or  changed  by 
any  agreement  between  the  employer  and  the  employee.  If  I  be 
a  capitalist  engaged  in  the  production  of  chairs,  the  wages  of  the 
laborer  who  finished  that  chair  and  the  profits  of  my  capital  must 
both  be  paid  from  its  proceeds.  Not  merely  must  he  be  paid  his 
wages  and  I  my  profits,  but  every  person  who  has  furnished  any  of 
the  materials  or  who  has  contributed  in  any  degree  to  its  produc- 
tion must  be  paid  from  the  sum  realized  by  the  sale  of  it.  There 
is  no  other  fund  from  which  their  compensation  can  be  drawn. 
The  wages  of  each  laborer  who  contributes  to  it  is  determined  by 
the  proportion  which  his  labor  bears  to  all  the  labor  expended  in 
its  production.  My  laborer  and  I  cannot  by  any  agreement  be- 
tween ourselves  change  the  proportion  of  that  chair  to  which  each 
of  these  other  laborers  are  entitled.  We  cannot  even  change  our 

485 


own  proportion.  That  is  fixed,  as  we  have  seen,  by  the  competi- 
tion of  laborers  for  employment  on  the  one  hand,  and  of  capital 
for  profits  on  the  other.  But  while  we  cannot  by  any  agreement 
between  ourselves  change  the  proportion  of  this  particular  chair 
to  which  each  is  entitled,  there  is  one  method,  and  only  one,  by 
which  we  can  both  increase  our  earnings — he  his  wages  and  I  my 
profits — and  that  is  by  increasing  the  number  of  chairs  produced 
by  our  joint  industry. 

Nothing  can  be  further  from  the  truth  than  the  degrading 
notion — so  widely  entertained — that  wages  are  a  species  of  alms 
depending  on  the  moral  attributes  of  the  employer — that  good 
employers  pay  high  wages  and  bad  employers  low  wages.  The 
wages  of  the  laborer  depend  on  his  own  efficiency.  Wherever  a 
man  labors,  he  creates  the  fund  from  which  he  must  be  paid.  Be- 
fore his  wages  can  be  increased  that  fund  must  be  increased  and 
by  his  own  hands.  Whether  he  be  driving  a  locomotive,  handling 
a  brake,  mending  a  track,  or  guiding  a  ship  across  the  sea,  making 
chairs,  tables,  or  shoes,  building  houses  or  planting  crops,  arrang- 
ing for  the  sale  of  commodities  in  the  market,  or  for  the  dis- 
tribution of  their  proceeds  among  those  who  produced  them,  the 
only  method  by  which  his  wages  can  be  increased  is  by  an  increase 
in  the  efficiency  of  his  own  labor. 

It  is  quite  generally  believed  that  there  is  an  essential  and 
irreconcilable  conflict  between  employer  and  employee — that  the 
laborer  cannot  increase  his  wages  except  by  reducing  the  profit  on 
capital,  and  that  capital  can  increase  its  earnings  only  by  decreas- 
ing the  rate  of  wages.  If  the  amount  which  human  industry 
could  produce  were  a  fixed  and  immovable  quantity,  the  theory 
that  the  share  of  the  laborer  could  be  increased  only  at  the  ex- 
pense of  the  employer,  and  vice  versa,  would  have  some  basis  of 
justification.  But  the  whole  history  of  the  world  shows  that  the 
productive  capacity  of  man  is  practically  limitless.  It  has  in- 
creased from  day  to  day.  It  is  greater  now  than  it  was  a  year  ago. 
It  is  probably  ten  times  greater  at  the  close  than  it  was  at  the  be- 
ginning of  this  century.  In  the  course  of  the  next  century  it  is 
likely  to  grow  beyond  our  capacity  to  conceive  at  this  moment. 
Wages  have  never  increased  except  as  production  has  increased. 
An  increase  in  wages  is  but  the  distribution  of  an  increased  pro- 
duction. A  reduction  of  wages  is  the  distribution  of  a  dimin- 
ished production.  Employer  and  employee  cannot  prosper  sepa- 
rately, or  at  the  expense  of  each  other.  The  prosperity  of  each 
flows  from  the  same  fountain.  The  rate  of  wages  cannot  be  in- 
creased at  the  expense  of  capital,  and  the  profits  of  capital  cannot 
be  swelled  at  the  expense  of  wages,  but  the  prosperity  of  both  can 

486 


be  increased  by  an  increase  in  the  yield  of  human  industry  and  the 
division  of  that  increase  between  them. 

We  have  been  called  to  consider  the  effect  on  industry  of  com- 
binations of  labor  as  well  as  of  capital,  and  yet  little,  if  any,  atten- 
tion has  been  bestowed  on  the  strike, — that  most  dangerous  form 
of  civil  war, — ever  threatening  industrial  communities, — most 
threatening  where  prosperity  is  widest.  The  disasters  of  war 
have  at  least  the  compensation  that  those  who  suffer  from  them 
are  brought  together  in  bonds  of  closer  union  by  the  recollection 
of  calamities  which  they  have  shared,  and  by  the  necessity  of 
cooperating  to  repair  them;  but  the  strike  leaves  behind  it  no 
memories  except  those  of  hate  and  injury,  leading  to  wider  dis-  . 
trust,  further  recriminations  and  fresh  disturbances.  War  arrays 
nations  against  each  other,  but  it  draws  the  people  of  each  nation 
closer.  The  strike  tends  to  resolve  society  into  its  original  ele- 
ments— each  hostile  to  all  others.  It  is  more  dangerous  than 
foreign  invasion  or  domestic  insurrection,  as  the  cancer  which 
corrodes  the  vitals  is  more  deadly  than  any  injury  to  a  single 
limb. 

Compulsory  arbitration  has  been  suggested  as  a  remedy  for 
industrial  disturbances.  Ladies  and  gentlemen,  compulsory  arbi- 
tration is  inconsistent  with  a  condition  of  free  labor.  That  man 
is  not  free  who  cannot  decide  freely  whether  he  will  work  or 
whether  he  won't,  without  any  semblance  of  coercion.  Arbitra- 
tion to  be  effective  must  be  binding  on  both  sides.  If  the  tribunal 
have  power  to  fix  a  rate  of  wages,  it  must  have  the  right  to  enforce 
obedience  to  its  decree  by  the  laborer  as  well  as  by  the  employer. 
To  compel  laborers  to  work  upon  any  terms  would  be  to  reduce 
them  to  servitude.  To  compel  an  employer  to  pay  higher  wages 
than  his  business  will  permit  would  reduce  him  to  bankruptcy, 
and  deprive  him  of  the  power  to  pay  any  wages.  I  know  of  no 
means  by  which  a  court  could  determine  the  exact  value  of  a 
laborer's  product.  Moreover,  elaborate  devices  for  the  suppres- 
sion of  strikes  are  wholly  unnecessary.  Strikes  must  be  pre- 
vented by  removing  the  causes  which  produce  them,  and  I  think 
it  can  be  demonstrated  that  strikes  spring  not  from  inherent  and 
irreconcilable  difficulties  between  employers  and  employees,  but 
from  a  misconception  of  their  true  relations. 

This  misconception  can  be  traced  to  the  very  general  but  none 
the  less  erroneous  idea  that  employment  involves  the  relation  of 
master  and  servant.  The  word  "service"  has  come  down  to  us 
from  the  days  of  the  old  Roman  Empire,  when  all  labor  was  slave 
labor.  The  capacity  of  a  mere  word  for  mischief  has  no  stronger 
illustration  than  the  train  of  evil  consequences  which  have  flowed 

487 


from  the  application  of  this  word  "service"  to  free  labor.  It  has 
bred  contempt  in  the  employer  for  the  employee,  and  distrust  in 
the  employee  for  the  employer.  We  have  seen  that  the  one  source 
of  prosperity  for  employer  and  employee  is  the  prosperity  of  the 
industry  in  which  both  are  engaged.  That  being  so,  the  relation 
between  employer  and  employee  is  not  one  of  service,  but  of  part- 
nership. The  partners  may  be  changed,  but  the  partnership  must 
continue  while  industry  is  active.  The  employer  may  discharge 
his  laborers,  that  is  to  say,  he  may  change  his  partners,  but  he 
cannot  prosecute  his  business  unless  he  employs  other  laborers 
who  at  once  become  his  partners.  The  partnership  of  all  free 
men  engaged  in  industry  cannot  be  changed.  It  is  fixed  by  laws 
as  immutable  as  those  which  regulate  the  movements  of  the 
planets,  or  the  course  of  the  seasons. . 

If  employers  and  employees  realized  that  they  were  partners 
with  common  interests — as  they  are — it  is  impossible  to  believe 
that  either  could  ever  be  led  to  interrupt  the  operations  of  the 
industry  on  which  the  prosperity  of  both  depends.  The  gravest 
disturbances  to  industry  have  arisen,  not  from  disputes  about 
wages,  but  from  the  refusal  of  employers  to  discuss  conditions  of 
employment  with  agents  selected  bv  their  employees,  or,  in  other 
words,  with  labor  unions.  These  refusals  have  been  based  on 
various  pretexts,  but  I  think  they  all  sprang  from  the  same 
source — a  feeling  on  the  part  of  the  employer  that  there  would  be 
some  abasement  of  dignity  in  treating  a  laborer  not  as  a  servant 
to  be  commanded  but  as  a  partner  to  be  consulted. 

Conceding  for  the  sake  of  argument  that  the  organization  of 
unions  or  the  appointment  of  walking  delegates  be  unwise  or  un- 
profitable, the  fact  remains  that  the  laborers  insist  upon  dealing 
with  their  employers  through  these  agencies.  We  have  seen  that 
the  laws  governing  industry  fix  the  rate  of  wages  according  to  the 
value  of  the  product.  The  employer  must  determine  that  value 
at  the  peril  of  bankruptcy, — or  at  least  of  loss.  While  he  alone 
determines  the  rate  of  wages,  what  difference  can  it  make  to  him 
whether  he  announces  his  conclusion  to  A  or  to  B,  to  each  work- 
man separately,  or  to  a  labor  union  representing  all  his  workmen  ? 

If  the  employer  and  the  employee  could  be  induced  to  reason 
together,  they  could  not  quarrel.  It  is  true  that  the  demands 
of  laborers  are  often  unreasonable,  but  the  best  way  to  defeat  an 
unreasonable  demand  is  to  insist  that  it  be  formulated.  The 
striker  has  but  one  weapon,  and  that  is  public  opinion.  If  he  be 
compelled  to  state  his  grievance  before  the  public  and  his  posi- 
tion be  unreasonable,  public  opinion  would  be  as  quick  to  con- 
demn him  as  it  has  been  to  support  him  when  the  attitude  of  his 


employer  was  "believed  to  be  unjust  or  intolerant.  We  hear  much 
about  the  boycott.  It  may  be  a  good  weapon  or  it  may  be  a  bad 
one.  It  may  be  justifiable  or  it  may  be  unjustifiable,  but  certain 
it  is  that  a  boycott  depends  absolutely  on  an  overwhelming  public 
opinion.  A  mere  majority  could  not  make  it  formidable.  It  is 
effective  only  when  the  whole  population  is  practically  unani- 
mous in  enforcing  it.  The  day  that  industrial  issues  are  dis- 
cussed in  public, — the  workingmen  compelled  to  define  their 
demands  and  employers  forced  to  deal  with  these  specific  de- 
mands, excluding  all  collateral  questions,  strikes  will  become 
impossible  and  boycotts  will  be  unknown. 

I  say  that  discussion  will  obviate  strikes  because  it  would  be 
difficult  to  unite  employees  in  an  unjustifiable  demand,  and  im- 
possible to  enlist  public  opinion  in  support  of  it.  A  laborer  who 
demands  more  than  the  value  of  his  product  is  invading,  not  the 
rights  of  his  employer,  but  the  rights  of  all  the  other  laborers — 
bis  unknown  partners  scattered  all  over  the  globe — who  have  con- 
tributed to  the  industry  in  which  he  is  engaged.  If  one  laborer 
gets  more  than  his  share  of  a  product  to  which  many  have  con- 
tributed, some  other  laborer  must  get  less.  If  the  man  who 
finishes  that  chair  obtains  an  undue  proportion  of  the  proceeds, 
the  man  who  felled  the  trees  in  the  forest,  or  who  transported  the 
materials  or  who  furnished  the  tools,  or  the  glue,  must  get  less 
than  his  share,  for  there  is  nothing  to  divide  between  them  except 
the  proceeds  of  the  chair.  On  a  railway  system  everybody  must 
be  paid  from  the  earnings.  If  one  gets  more  than  his  share  some- 
body else  must  get  less.  If  the  locomotive  engineer  is  paid  more 
than  his  fair  proportion,  the  switch-tender,  the  brakeman,  or  the 
fireman,  must  get  less  than  his  share  of  the  fund  produced  by 
them  all.  These  principles  are  so  plain  that  if  expounded  with 
frankness  and  good  temper  an  attempt  by  any  class  of  employees 
to  obtain  unwarrantably  high  wages  would  appear  at  once  to  be  a 
raid  not  on  the  profits  of  the  employer  so  much  as  on  the  wages  of 
other  laborers.  A  public  discussion  would  make  this  plain  and 
would  enlist  against  them  on  the  spot  the  unanimous  opinion  of 
the  community.  No  laborer  could  make  an  effective  appeal  to 
force — either  the  active  force  of  weapons  or  the  passive  force  of 
the  boycott — when  the  question  between  himself  and  his  em- 
ployer had  been  fully  discussed  with  the  entire  community  for  a 
tribunal  and  an  audience. 

Let  no  man  think  that  in  what  I  say  here  I  undertake  to  ex- 
cuse violence  under  any  circumstance.  I  believe  that  the  laborer 
and  his  employer  are  partners,  and  that  full  and  fair  discussion 
of  all  questions  between  them  is  essential  to  the  prosperity  of 


the  partnership.  But  if  one  of  the  partners  undertake  to  become 
violent,  I  would  be  the  first  to  condemn  him,  to  restrain  him,  if 
necessary,  to  punish  him.  There  is  something  more  important 
than  the  success  of  any  particular  partnership,  and  that  is  the 
preservation  of  the  public  peace,  on  which  depends  the  industry 
of  the  whole  community. 

Having  said  this,  I  hope  I  will  not  be  misunderstood  if  I  add 
that,  in  my  judgment,  whenever  a  strike  occurs  the  master  should 
be  held  responsible  to  public  opinion.  I  don't  say  this  because 
I  believe  workmen  are  always  reasonable,  always  loyal,  always 
obedient,  or  always  industrious.  I  say  it  simply  because  the 
existence  of  a  strike  on  any  industry  shows  that  the  person  in 
charge  of  it  is  unable  to  manage  men.  This  is  not  necessarily  a 
reflection  upon  his  moral  character.  His  inability  to  manage  his 
employees  may  proceed  from  the  excellence  of  his  moral  qualities, 
but  the  fact  remains  that  no  man  should  be  suffered  to  remain 
in  control  of  laborers  who  is  unable  to  manage  them.  This  is 
but  applying  to  the  management  of  men  the  test  now  applied  by 
all  owners  of  industrial  enterprises  to  the  management  of  mules 
or  horses.  If  a  man  engaged  to  drive  a  pair  of  mules  repeatedly 
allowed  his  animals  to  become  entangled  with  the  wagon  which 
they  were  harnessed  to  draw,  do  you  suppose  he  would  be  main- 
tained in  his  employment,  however  unimpeachable  his  moral 
character?  Would  he  be  heard  for  a  moment  to  charge  the  fail- 
ure of  his  industry  upon  the  perversity  of  the  mules?  No;  his 
employer,  recognizing  his  sobriety,  his  truthfulness,  his  honesty, 
and  his  general  excellence,  would  nevertheless  replace  him  by 
some  person,  perhaps  of  inferior  morality,  but  of  greater  dexter- 
ity in  the  handling  of  mules.  And  surely  a  test  of  capacity  ap- 
plied to  the  management  of  animals  should  be  applied  more 
rigidly  to  the  management  of  men. 

The  person  in  charge  of  a  great  industry,  like  the  captain  on 
the  bridge  of  a  ship,  should  be  held  responsible  for  the  safety  of 
his  charge  no  matter  what  the  peril  which  may  "beset  it. 

When  some  years  ago  the  St.  Paul  ran  ashore  on  the  New 
Jersey  beach,  a  passenger  undertook  to  console  the  captain  by 
saying  it  was  well  understood  that  the  accident  was  caused  by  a 
mistaken  report  of  the  officer  in  charge  of  the  soundings,  but  that 
loyal  seaman  answered,  "I  am  the  captain  of  this  ship.  I  am  in 
control  of  every  member  of  the  crew,  from  the  stoker  in  the  hold 
to  the  lookout  at  the  masthead,  and  responsible  for  all  of  them. 
I  alone  must  bear  the  blame  for  this  disaster."  So  when  a  great 
industrial  enterprise  lies  paralyzed  through  the  quarrels  of  those 
whose  cooperation  is  essential  to  its  efficiency,  the  man  in  charge 

490 


of  it,  the  captain  on  the  bridge,  should  not  be  allowed  to  divide 
his  responsibility  with  any  one;  the  collapse  of  his  industry 
should  be  taken  as  conclusive  proof  that  he  is  unable  to  manage  it. 

We  have  seen  that  compulsory  arbitration  is  not  a  remedy 
which  can  be  enforced  in  a  free  country.  Can  the  state,  then,  do 
nothing  to  promote  among  employers  and  employees  a  proper 
conception  of  their  relations,  and  prevent  these  industrial  dis- 
turbances which  by  interrupting  all  production,  work  irreparable 
injury  to  them  and  to  the  whole  community?  Directly  the 
state  can  do  nothing,  indirectly  it  can  accomplish  a  great  deal. 
In  a  free  country  where  an  enterprise  is  of  a  private  character, 
whether  conducted  by  individuals  or  corporations,  the  state 
cannot  interfere  with  the  management  of  its  business.  But 
where  a  corporation  chartered  to  discharge  public  functions  is 
forced  to  suspend  its  service  by  a  strike  of  its  employees,  it  is  the 
right  and  it  should  be  made  the  duty  of  the  state  to  bring  pro- 
ceedings for  the  revocation  of  its  charter,  while  every  citizen  in- 
convenienced by  its  breach  of  duty  should  be  given  a  right  of 
action  against  it  for  substantial  damages. 

Where,  however,  it  could  be  shown  that  the  corporation  at  all 
times  had  been  ready  to  discuss  with  its  employees  through  any 
agency  which  they  thought  proper  to  select,  all  questions  at  issue 
between  them  that  fact  should  be  a  complete  defense  to  any 
actions  by  the  state  or  by  individuals.  No  matter  what  the  sub- 
ject of  dispute  might  be,  whether  it  were  a  question  of  wages,  or 
hours,  or  anything  else,  so  long  as  the  corporation  could  show  that 
it  had  been  ready  to  discuss  it  fully  with  its  employees  directly  or 
with  anybody  designated  by  them,  it  should  be  held  blameless. 

With  such  a  law  on  the  statute  book  discussions  would  be 
certain  to  precede  hostilities  between  corporations  exercising 
public  franchises  and  their  employees.  For  the  reasons  already 
stated  this  in  itself  would  be  sufficient  to  maintain  industrial 
peace  between  them.  The  fear  of  strikes  is  a  spectre  which  con- 
stantly haunts  industry,  causing  capital  to  hesitate  and  enter- 
prise to  lag.  Corporations  exercising  public  franchises  are  the 
largest  employers  of  labor.  Any  system  of  managing  employees 
imposed  on  them  which  proved  effective  in  avoiding  labor  dis- 
putes would  be  adopted  voluntarily,  aye,  eagerly  by  private  em- 
ployers and  the  gravest  danger  to  civilized  society  would  be 
greatly  reduced,  if  not  wholly  averted.  This  remedy  would 
not  be  a  radical  innovation  on  our  system  of  jurisprudence, 
but  merely  a  provision  for  the  better  enforcement  of  funda- 
mental principles.  A  distinguished  judge  in  New  York  some 
years  ago  entertained  an  application  for  a  mandamus  against 

491 


a  railway  company,  the  operation  of  whose  system  had  been 
suspended  by  a  strike  among  its  freight  handlers,  and  the  prin- 
ciple on  which  he  acted  would  justify  such  a  law  as  I  suggest. 

These,  then,  are  my  suggestions  for  the  cure  of  such  evils  as 
affect  the  body  politic :  equal  rights  to  all  men  in  the  enjoyment  of 
all  facilities  furnished  by  the  government  directly  or  by  agencies 
of  its  selection;  publicity  of  every  detail  in  corporate  management 
affecting  the  community;  penalties  for  the  interruption  through 
strikes  or  other  industrial  disturbances  of  any  public  service 
which  a  corporation  is  chartered  to  perform,  unless  the  corpora- 
tion can  show  that  it  had  always  been  ready  to  discuss  matters  in 
dispute  with  its  employees  through  agents  of  their  own  selection. 

These  remedies  are  not  ambitious  plans  for  the  reorganization 
of  society,  but  merely  suggestions  to  promote  the  industrial 
cooperation  of  men  by  a  fuller  recognition  of  certain  immutable 
and  eternal  laws  governing  the  human  race.  It  is  said  that  the 
closer  cooperation  of  man,  tends  to  destroy  individualism.  In- 
dividualism is  another  of  those  phrases  which  appear  to  have 
been  invented  for  the  special  purpose  of  bewildering  the  mind. 
It  disguises  an  argument  for  barbarism  under  an  expression  with 
a  -humanitarian  sound.  Individualism  in  its  last  analysis  is 
savagery.  The  savage  depending  on  himself  alone  for  his  shelter 
and  his  food,  treating  all  his  fellows  as  foes  to  be  shunned  or 
killed,  is  the  most  complete  instance  of  individualism  conceiva- 
ble. Individualism  is  isolation  or  savagery.  Association  or 
cooperation  is  civilization.  The  badge  of  savagery  is  the  weapon 
of  destruction  by  which  the  savage  maintains  his  isolation.  The 
badge  of  civilization  is  the  implement  of  production  by  which 
each  man  enlists  the  cooperation  of  many  men  for  the  benefit  of 
all.  All  civilized  men  are  engaged  in  a  great  scheme  of  coopera- 
tion, in  which  the  activity  of  every  man's  hands  is  of  vital  impor- 
tance to  all  the  rest. 

If  socialism  would  result  in  a  more  abundant  yield  of  the 
earth  I  would  be  a  socialist.  I  don't  believe  that  in  the  present 
condition  of  the  race  a  man  would  labor  as  zealously  or  as  effec- 
tively for  the  common  good  as  he  does  now  for  his  own  profit  and 
therefore  I  believe  socialism  would  restrict  rather  than  promote 
the  volume  of  production. 

Again,  we  are  told  that  closer  cooperation  among  men  tends 
inevitably  to  socialism.  This  conference  will  not  have  been  held 
in  vain  if  it  result  in  dispelling  to  some  extent  that  fog  of 
phrases  which  so  often  overhangs  economic  discussions,  causing 
men  to  lose  sight  of  the  object  which  they  have  undertaken  to 
consider.  The  matter  that  concerns  us  is  the  system  which  best 

492 


promotes  the  fruitfulness  of  industry,  not  the  term  in  which  that 
system  may  be  described. 

Socialism  and  individualism  are  features  of  our  existence 
now.  No  one  can  attempt  to  gratify  individual  desires  without 
serving  society  at  large.  Wherever  a  man  labors  to  improve  his 
own  condition,  he  contributes  to  the  welfare  of  the  entire  race. 
Can  you  or  I  do  one  thing  for  individual  benefit  without  bene- 
fiting all  our  fellows?  Can  vanity  indulge  itself,  can  pride 
gratify  itself,  can  appetite  satisfy  itself,  without  paying  a  tribute 
to  the  universal  partnership  in  which  we  are  all  engaged?  The 
man  who  builds  a  palace  to  gratify  pride,  must  employ  ten 
thousand  hands  in  every  quarter  of  the  globe.  The  woman  who 
buys  a  robe  to  indulge  vanity,  must  employ  hundreds  of  her 
fellow-creatures  throughout  the  world.  The  miser,  seeking  to 
raise  the  rate  of  interest  on  his  capital  from  5  to  6  per  cent 
must  serve  his  fellows  in  doing  so.  There  is  but  one  way  in 
which  he  can  increase  the  profits  of  his  capital,  and  that  is  by  an 
increase  of  its  productivity.  If  his  capital  be  employed  in  mak- 
ing tables,  more  tables  must  be  produced;  if  in  building,  more 
houses  must  be  erected ;  if  in  agriculture,  the  area  of  tillage  must 
be  increased.  In  doing  all  these  things  more  labor  must  be  em- 
ployed, and  thus  hundreds  of  dollars  will  be  distributed  in  wages 
for  every  one  that  is  gained  by  cam'tal.  Our  pride,  our  hopes, 
our  fears,  our  ambitions  are  but  illusions  which  spur  us  to  activity 
in  the  service  of  others, — traces  that  bind  us  to  the  car  of  human 
progress,  making  of  all  our  activities  forces  to  move  it  onward 
and  upward.  The  questions  which  perplex  the  civilization  of 
this  age  arise  from  freedom  and  the  ever-swelling  tide  of 
prosperit}7,  of  which  freedom  is  the  fountain.  The  triumph  of 
Christianity  led  inevitably  to  the  establishment  of  this  republic. 
A  government  based  on  the  equality  of  all  men  in  the  eye  of  the 
law  was  the  necessary  fruit  of  a  religious  belief  in  the  equality 
of  all  men  in  the  sight  of  God. 

The  economic  effect  of  Christianity  was  the  substitution  of 
free  labor  for  slave  labor.  The  removal  of  manacles  from  the 
hands  of  man  has  worked  an  extraordinary  change  in  his  condi- 
tion. It  has  wonderfully  increased  his  productivity,  extended 
the  scope  of  his  powers,  multiplied  his  possessions,  lengthened 
the  span  of  his  days,  widened  the  horizon  of  his  ambitions.  But 
out  of  the  very  prosperity  which  it  has  created,  a  difficulty  has 
sprung.  The  slave  was  willing  to  accept  from  the  hands  of  his 
master  a  crust  of  bread  as  a  reward  for  his  labor,  glad  to  escape 
the  lash,  but  the  free  laborer  demands  a  fair  share  of  the  property 

493 


which  has  been  created  by  his  toil.  The  adjustment  of  this  de- 
mand, the  fair  distribution  of  the  commodities  created  by  the 
cooperative  industry  of  every  man,  is  the  problem  of  this  age. 
I  do  not  think  it  is  an  insuperable  or  even  a  very  difficult  ques- 
tion. Its  solution  in  my  judgment,  will  be  found  by  recognizing 
in  our  industrial  systems,  the  partnership  of  man  as  we  have 
recognized  in  our  political  system,  the  equality, — the  brother- 
hood of  man.  While  the  relations  of  men  are  governed  by  the 
principles  of  justice  and  morality  which  underlie  this  govern- 
ment, and  indeed  the  whole  fabric  of  Christian  civilization, — I 
have  no  fear  of  the  future.  Words  cannot  disturb  me  while  every 
fact  in  history  encourages  me.  This  civilization  which  has  cre- 
ated our  marvelous  prosperity,  will  defend  it  and  maintain  it. 
I  have  no  sympathy  with  those  timid  souls  who  see  in  our  splendid 
growing  civilization  a  dizzy  eminence  from  which  the  race  is  in 
constant  peril  of  falling  back  into  the  darkness  and  ignorance 
from  which  it  has  risen.  I  prefer  to  regard  man  as  a  reasonable 
being,  pursuing  by  the  light  of  experience  an  ever-ascending  path- 
way of  progress,  proving  by  what  he  has  done,  his  capacity  for 
greater  deeds, — surveying  from  the  heights  which  he  has 
achieved,  with  courage,  with  determination,  and  with  confidence, 
the  still  nobler  heights  which  are  accessible. 


WILLIAM  JENNINGS  BKYAN. 

Several  times  during  his  address  the  speaker  was  interrupted 
by  bursts  of  applause,  but  especially  was  this  noticeable  when  he 
referred  to  Col.  Bryan  in  a  brief  but  glowing  eulogy.  As  he  took 
his  seat  the  demonstration  was  punctuated  by  calls  for  the  noted 
Nebraskan  who,  after  much  pressure,  stepped  forward  and  said : 

I  am  denying  myself  a  great  pleasure  when  I  refuse  to  respond 
to  your  very  cordial  invitation.  When  I  came  this  afternoon  and 
found  that  Mr.  Cockran  and  I  were  to  speak  together  this  evening, 
or  it  had  been  so  announced,  I  consulted  with  him  and  with  those 
who  were  in  charge,  and  it  was  the  decision  that  anything  like  a 
debate  would  not  be  in  keeping  with  the  purpose  of  this  con- 
ference. 

"We  are  not  here  to  arouse  partisan  feeling  by  standing  as 
representatives  of  different  ideas.  We  are  here  to  take  part  in  a 
conference,  to  give  expression  to  our  views,  and  to  gather  as  much 
information  as  we  can  from  the  views  expressed  by  others,  and  it 

494 


was  decided  that  it  was  better  that  Mr.  Cockran  should  have  this 
evening  by  himself  and  that  I  should  speak  to-morrow  at  10 
o'clock  and  give  my  views.  And  while,  as  I  say,  I  am  denying 
myself  a  great  pleasure  in  refusing  to  speak  to  this  magnificent 
audience,  I  am  sure  that  you  upon  reflection  will  agree  that  our 
decision  is  the  correct  one  and  that  the  purpose  of  this  conference 
shall  be  carried  out  and  that  we  shall  avoid  as  far  as  possible  any- 
thing that  might  seem  like  partisanship  or  an  attempt  to  array  one 
part  of  the  body  against  another  part. 

"I  don't  know  to  what  extent  Mr.  Cockran  represents  the  views 
of  the  delegates  here.  I  don't  know  to  what  extent  I  represent 
the  views  of  the  delegates  in  what  I  shall  say,  but  to-morrow  at  10 
o'clock  I  shall  submit  some  remarks  in  regard  to  the  subject  of 
monopoly  and  make  some  suggestions  as  to  methods  by  which 
monopoly  can  be  eliminated.  I  am  one  of  those  who  believe  that 
monopoly  in  private  hands  is  indefensible  in  a  free  country. 

"While  I  agree  with  much  that  Mr.  Cockran  has  said  to-night, 
agree  with  some  of  the  remedies  proposed,  I  cannot  fully  agree 
with  all  that  he  has  said,  and  to-morrow  instead  of  attempting  to 
answer  any  part  in  which  I  may  differ,  I  expect  to  present  this 
subject  as  it  appears  to  me  in  order  that  I  may  contribute  my  part 
toward  the  solution  of  this  great  question." 

At  10 :50  o'clock  the  conference  adjourned  until  10 :30  o'clock 
the  following  morning. 


MORNING  SESSION,   SEPTEMRER  16. 

It  was  10 :05  o'clock  when  Chairman  Howe  called  to  order  the 
first  of  the  two  last  sessions  of  the  conference.  In  anticipation  of 
Col.  William  J.  Bryan's  reply  to  Mr.  Cockran's  address  of  the  pre- 
ceding evening  the  hall  was  again  packed  to  the  doors,  and  many 
of  the  scenes  of  the  previous  evening  were  reenacted. 

Moved  by  Gaines,  of  Tennessee,  seconded  by  Davis,  of  Arkan- 
sas, that  a  committee  of  five  on  finance  and  publication  be  ap- 
pointed by  the  chair.  Carried. 


495 


W.  E.  STANLEY. 

Governor  of  Kansas. 

Chairman  Howe  introduced  Governor  Stanley,  of  Kansas,  who 
said: 

More  than  three  years  ago  in  this  city  a  great  political  party 
met  in  convention,  and  in  less  than  an  hour  changed  their  policy 
and  entrusted  their  banner  and  chances  of  success  into  the  hands 
of  a  new  and  untried  champion.  The  campaign  that  followed 
was  one  of  the  most  memorable — aye,  the  most  memorable  in 
the  history  of  American  politics.  We  did  not  all  agree  with  the 
wonderful  man  who  led  over  7,000,000  voters  with  him  in  that 
fight;  but  we  did  all  admire  his  matchless  eloquence  and  brilliant 
leadership. 

It  is  not  necessary  for  me  to  introduce  him  to  any  American 
audience.  I  take  pleasure,  however,  in  presenting  to  this  audi- 
ence Col.  W.  J.  Bryan,  who  will  now  address  you. 

WILLIAM  JENNINGS  BEYAN. 

Col.  Bryan  was  as  enthusiastically  received  as  he  had  been 
when  he  entered  the  hall  on  the  preceding  evening.  As  soon  as 
the  applause,  which  was  long  and  vigorous,  had  subsided  he  began 
his  address,  saying : 

I  appreciate  the  very  kind  words  spoken  by  Governor  Stanley 
in  presenting  me  to  this  audience.  I  am  glad  I  live  in  a  country 
where  people  can  differ  from  one  another,  differ  honestly,  express 
their  convictions  boldly,  and  yet  respect  one  another  and  acknowl- 
edge one  another's  rights.  I  am  not  vain  enough,  however,  to 
think  that  any  good  will  which  has  been  expressed  by  the  people 
toward  me  is  due  to  personal  merit.  If  I  have  had  political 
friends  it  is  because  people  believe  with  me  in  certain  ideas  or 
rather  because  I  believe  with  them  in  certain  ideas.  It  is  the 
idea  that  makes  the  man.  The  man  is  only  important  as  he  helps 
the  idea. 

I  come  this  morning  to  discuss  in  your  presence  a  great  ques- 
tion— a  question  of  growing  importance  to  the  American  people. 
The  trust  principle  is  not  a  new  principle,  but  the  trust  principle 
is  manifesting  itself  in  so  many  ways  and  the  trusts  have  grown 
so  rapidly  that  people  now  feel  alarmed  about  trusts  who  did  not 
feel  alarmed  three  years  ago.  The  trust  question  has  grown  in 

496 


importance,  because  within  two  years  more  trusts  have  been 
organized,  when  we  come  to  consider  the  capitalization  and  the 
magnitude  of  the  interests  involved,  than  were  organized  in  all 
the  previous  history  of  the  country,  and  the  people  now  come 
face  to  face  with  this  question :  Is  the  trust  a  blessing  or  a  curse? 
If  a  curse,  what  remedy  can  be  applied  to  the  curse? 

I  want  to  start  with  the  declaration  that  a  monopoly  in  pri- 
vate hands  is  indefensible  from  any  standpoint,  and  intolerable. 
I  make  no  exceptions  to  the  rule.  I  do  not  divide  monopolies  in 
private  hands  into  good  monopolies  and  bad  monopolies.  There 
is  no  good  monopoly  in  private  hands.  There  can  be  no  good 
monopoly  in  private  hands  until  the  Almighty  sends  us  angels  to 
preside  over  the  monopoly.  There  may  be  a  despot  who  is  bet- 
ter than  another  despot,  but  there  is  no  good  despotism.  One 
trust  may  be  less  harmful  than  another.  One  trust  magnate  may 
be  more  benevolent  than  another,  but  there  is  no  good  monopoty 
in  private  hands,  and  I  do  not  believe  it  is  safe  for  society  to  per- 
mit any  man  or  group  of  men  to  monopolize  any  article  of  mer- 
chandise or  any  branch  of  industry. 

What  is  the  defense  made  of  the  monopoly?  The  defense  of 
the  monopoly  is  always  placed  on  the  ground  that  if  you  will 
allow  a  few  people  to  control  the  market  and  fix  the  price  they 
will  be  good  to  the  people  who  purchase  of  them.  The  entire 
defense  of  the  trusts  rests  upon  a  money  argument.  If  the  trust 
will  sell  to  a  man  an  article  for  a  dollar  less  than  the  article  will 
cost  under  other  conditions,  then  in  the  opinion  of  some  that 
proves  a  trust  to  be  a  good  thing.  In  the  first  place  I  deny  that 
under  a  monopoly  the  price  will  be  reduced.  In  the  second  place, 
if  under  a  monopoly  the  price  is  reduced  the  objections  to  a 
monopoly  from  other  standpoints  far  outweigh  any  financial 
advantage  that  the  trust  could  bring.  But  I  protest  in  the  be- 
ginning against  settling  every  question  upon  the  dollar  argu- 
ment. I  protest  against  the  attempt  to  drag  every  question  down 
to  the  low  level  of  dollars  and  cents. 

In  1859  Abraham  Lincoln  wrote  a  letter  to  the  Eepublicans 
of  Boston  who  were  celebrating  Jefferson's  birthday,  and  in  the 
course  of  the  letter  he  said :  "The  Eepublican  party  believes  in 
the  man  and  the  dollar,  but  in  case  of  conflict  it  believes  in  the 
man  before  the  dollar."  In  the  early  years  of  his  administration 
he  sent  a  message  to  Congress,  and  in  that  message  he  warned  his 
countryman  against  the  approach  of  monarchy.  And  what  was 
it  that  alarmed  him?  He  said  it  was  the  attempt  to  put  capital 
upon  an  equal  footing  with,  if  not  above,  labor  in  the  structure 
of  government,  and  in  that  attempt  to  put  capital  even  upon  an 

497 


equal  footing  with  labor  in  the  structure  of  government  he  saw 
the  approach  of  monarchy.  Lincoln  was  right.  Whenever  you 
put  capital  upon  an  equal  footing  with  labor,  or  above  labor  in 
the  structure  of  government  you  are  on  the  road  toward  a  gov- 
ernment that  rests  not  upon  reason  but  upon  force. 

Nothing  is  more  important  than  that  we  shall  in  the  begin- 
ning rightly  understand  the  relation  between  money  and  man. 
Man  is  the  creature  of  God  and  money  is  the  creature  of  man. 
Money  is  made  to  be  the  servant  of  man,  and  I  protest  against  all 
theories  that  enthrone  money  and  debase  mankind. 

What  is  the  purpose  of  the  trust  or  the  monopoly?  For  when 
I  use  the  word  trust  I  use  it  in  the  sense  that  the  trust  means 
monopoly.  What  is  the  purpose  of  monopoly?  You  can  find 
out  from  the  speeches  made  by  those  who  are  connected  with  the 
trusts.  I  have  here  a  speech  made  by  Charles  E.  Flint  at  Boston 
on  the  25th  day  of  last  May,  and  the  morning  papers  of  the  26th 
in  describing  the  meeting  said  he  defended  trust  principles  be- 
fore an  exceedingly  sympathetic  audience,  and  then  added :  "For 
his  audience  was  composed  almost  exclusively  of  Boston  bank- 
ers." "We  thus  secure,"  he  says,  "the  advantages  of  larger  aggre- 
gations of  capital  and  ability;  if  I  am  asked  what  they  are  the 
answer  is  only  difficult  because  the  list  is  so  long." 

But  I  want  now  to  read  to  you  a  few  of  the  advantages  to  be 
derived  by  the  trusts  from  the  trust  system.  "Saw  material 
bought  in  large  quantities  is  secured  at  lower  prices."  That  is 
the  first  advantage.  One  man  to  buy  wool  for  all  the  woolen 
manufacturers.  That  means  that  every  man  who  sells  wool  must 
sell  it  at  the  price  fixed  by  this  one  purchaser  in  the  United 
States.  The  first  thing  is  to  lower  the  price  of  raw  material. 
The  great  majority  of  the  people  are  engaged  in  the  production  of 
raw  material  and  in  the  purchase  of  finished  products.  Com- 
paratively few  can  stand  at  the  head  of  syndicates  and  monopolies 
and  secure  the  profits  from  them.  Therefore,  the  first  advantage 
of  a  monopoly  is  to  lower  the  price  of  the  raw  material  furnished 
by  the  people.  Note  the  next  advantage :  "Those  plants  which 
are  best  equipped  and  most  advantageously  situated  are  run  con- 
tinuously and  in  preference  to  those  less  favored." 

The  next  thing,  after  they  have  bought  all  the  factories,  is  to 
close  some  of  them  and  to  turn  out  of  employment  the  men  who 
are  engaged  in  them.  If  you  will  go  about  over  the  country  you 
will  see  where  people  have  subscribed  money  to  establish  enter- 
prises, and  where  these  enterprises,  having  come  under  the  con- 
trol of  the  trusts,  have  been  closed  and  stand  now  as  silent  monu- 
ments of  the  trust  system. 

498 


Behold  the  next  advantage:  "In  case  of  local  strikes  and 
fires,  the  work  goes  on  elsewhere,  thus  preventing  serious  loss." 
Do  not  the  laboring  men  understand  what  that  means?  "In  case 
of  local  strikes  or  fires  the  work  goes  on  elsewhere,  thus  prevent- 
ing serious  loss."  What  does  it  mean  ?  It  means  that  if  the  peo- 
ple employed  in  one  factory  are  not  satisfied  with  the  terms  fixed 
by  the  employer  and  strike,  the  trust  can  close  that  factory  and 
let  the  employees  starve  while  work  goes  on  in  other  factories 
without  loss  to  the  manufacturers. 

It  means  that  when  the  trust  has  frozen  out  the  striking  em- 
ployees in  one  factory  and  compelled  them  to  return  to  work  at 
any  price  to  secure  bread  for  their  wives  and  children  it  can  pro- 
voke a  strike  somewhere  else  and  freeze  the  workmen  out  there. 
When  a  branch  of  industry  is  entirely  in  the  hands  of  one  great 
monopoly,  so  that  every  skilled  man  in  that  industry  has  to  go 
to  the  one  man  for  employment,  then  that  one  man  will  fix  wages 
as  he  pleases  and  the  laboring  men  will  share  the  suffering  of  the 
man  who  sells  the  raw  materials. 

"There  is  no  multiplication  of  the  means  of  distribution  and 
a  better  force  of  salesmen  takes  the  place  of  a  large  number." 
That  is  the  next  advantage  named.  I  want  to  warn  you  that 
when  the  monopoly  has  absolute  control,  brains  will  be  at  a  dis- 
count, and  relatives  will  be  found  to  fill  these  positions.  When 
there  is  competition  every  employer  has  to  get  a  good  man  to 
meet  competition,  but  when  there  is  no  competition  anybody 
can  sit  in  the  office  and  receive  letters  and  answer  them  because 
everybody  has  to  write  to  the  same  house  for  anything  he  wants. 
There  is  no  nuestion  about  it.  A  trust,  a  monopolv,  can  lessen 
the  cost  of  distribution.  But  when  it  does  so  society  has  no 
assurance  that  it  will  sret  any  of  the  benefits  from  that  reduction 
of  cost.  But  you  will  take  away  the  necessity  for  skill  and  brains. 
You  will  take  away  the  stimulus  that  has  given  to  us  the  quick, 
the  ever  alert  commercial  traveler.  These  commercial  evangel- 
ists, who  go  from  one  part  of  the  country  to  the  other  proclaiming 
the  merits  of  their  respective  goods,  will  not  be  needed,  because 
when  anybody  wants  merchandise  all  he  has  to  do  is  to  write  to 
the  one  man  who  has  the  article  for  sale,  and  say.  "What  will  you 
let  me  have  it  for  to-day?" 

And  here  is  another  advantage:  "Terms  and  conditions  of 
sale  become  more  uniform  and  credit  can  be  more  safely  granted ." 
The  trust  can  not  onlv  fix  the  price  of  what  it  sells,  but  it  can  fix 
the  terms  upon  which  it  sells.  You  can  pay  cash,  or,  if  there  is 
a  discount,  it  is  just  so  much  discount,  and  you  have  to  trust  to 
the  manager's  generosity  as  to  what  is  fair  when  he  is  on  one 

499 


side  and  you  on  the  other.  I  have  read  some  of  the  advantages 
which  a  great  trust  magnate  thinks  will  come  to  the  trust. 

What  is  the  first  thing  to  he  expected  of  a  trust?  That  it  will 
cut  down  expenses.  What  is  the  second?  That  it  will  raise 
prices.  We  have  not  had  in  this  country  a  taste  of  a  complete 
trust,  a  complete  monopoly,  and  we  cannot  tell  what  will  be  the 
results  of  a  complete  monopoly  by  looking  at  the  results  that 
have  followed  from  an  attempt  to  secure  a  monopoly.  A  corpo- 
ration may  lower  prices  to  rid  itself  of  competitors;  but  when  it 
has  rid  itself  of  competitors,  what  is  going  to  be  the  result?  My 
friends,  all  you  have  to  know  is  human  nature.  God  made  men 
selfish.  I  do  not  mean  to  say  that  He  made  a  mistake  when  He 
did,  because  selfishness  is  merely  the  outgrowth  of  an  instinct  of 
self-preservation.  It  is  the  abnormal  development  of  a  man's 
desire  to  protect  himself;  but  everybody  who  knows  human  na- 
ture knows  how  easy  it  is  to  develop  that  side  of  a  man's  being. 
Occasionally  I  find  a  man  who  says  he  is  not  selfish,  but  when  I 
do,  I  find  a  man  who  can  prove  it  only  by  his  own  affidavit. 

We  get  ideas  from  every  source.  An  idea  is  the  most  impor- 
tant thing  that  a  man  can  get  into  his  head.  An  idea  will  control 
a  man's  life.  An  idea  will  revolutionize  a  community,  a  state, 
a  nation,  the  world.  And  we  never  know  when  we  are  going  to 
get  an  idea.  Sometimes  we  get  them  when  we  not  want  to  get 
them,  and  sometimes  we  get  them  from  sources  which  would  not 
be  expected  to  furnish  ideas.  We  get  them  from  our  fellow  men. 
We  get  them  from  inanimate  nature.  We  get  them  from  the  ani- 
mals about  us.  I  got  a  valuable  idea  once  from  some  hogs.  I 
was  riding  through  Iowa  and  saw  some  hogs  rooting  in  a  field. 
The  first  thought  that  came  to  me  was  that  those  hogs  were 
destroying  a  great  deal  in  value,  and  then  my  mind  ran  back  to 
the  time  when  I  lived  upon  a  farm  and  when  we  had  hogs. 

Then  I  thought  of  the  way  in  which  we  used  to  protect  prop- 
erty from  the  hogs  by  putting  rings  in  the  noses  of  the  hogs ;  and 
then  the  question  came  to  me,  why  did  we  do  it?  Not  to  keep 
the  hogs  from  getting  fat,  for  we  were  more  interested  in  their 
getting  fat  than  they  were ;  the  sooner  they  got  fat  the  sooner  we 
killed  them;  the  longer  they  were  in  getting  fat  the  longer  they 
lived.  But  why  did  we  put  the  rings  in  their  noses?  So  that 
while  they  were  getting  fat  they  would  not  destroy  more  than 
they  were  worth.  And  then  the  thought  came  to  me  that  one  of 
the  great  purposes  of  government  was  to  put  rings  in  the  noses  of 
hogs.  I  don't  mean  to  say  anything  offensive,  but  we  are  all 
hoggish.  In  hours  of  temptation  we  are  likely  to  trespass  upon 
the  rights  of  others. 

500 


I  believe  in  self-government.  I  believe  in  the  doctrines  that 
underlie  this  government;  I  believe  that  people  are  capable  of 
governing  themselves.  Why?  Because  in  their  sober  moments 
they  have  helped  to  put  rings  in  their  own  noses,  to  protect  others 
from  themselves  and  themselves  from  others  in  hours  of  tempta- 
tion. And  so  I  believe  we  must  recognize  human  nature.  We 
must  recognize  selfishness  and  we  must  so  make  our  laws  that 
people  shall  not  be  permitted  to  trespass  upon  the  rights  of  others 
in  their  efforts  to  secure  advantages  for  themselves. 

I  believe  society  is  interested  in  the  independence  of  every 
citizen.  I  wish  we  might  have  a  condition  where  every  adult 
who  died  might  die  leaving  to  his  widow  and  children  enough 
property  for  the  education  of  his  children  and  the  support  of  his 
widow.  Society  is  interested  in  this  because  if  a  man  dies  and 
leaves  no  provisions  for  his  wife  and  children  the  burden  falls  upon 
society.  But  while  I  wish  to  see  every  person  secure  for  himself 
a  competency,  I  don't  want  him  to  destroy  more  than  he  is  worth 
while  he  is  doing  that.  And  I  believe  the  principle  of  monopply 
finds  its  inspiration  in  the  desire  of  men  to  secure  by  monopoly 
what  they  cannot  secure  in  the  open  field  of  competition.  In 
other  words,  if  I  were  going  to  try  to  find  the  root  of  the  mo- 
nopoly evil  I  would  do  as  I  have  often  had  occasion  to  do — go 
back  to  the  bible  for  an  explanation — and  I  would  find  it  in  the 
declaration  that  the  love  of  money  is  the  root  of  all  evil. 

I  will  not  ask  you  all  to  agree  with  me ;  we  have  not  met  here 
as  a  body  of  men  who  agree.  We  have  met  here  as  a  body  of  men 
who  are  seeking  light  and  each  ought  to  be  willing  to  hear  what 
every  other  person  has  to  say,  and  each  of  us  should  desire  the 
triumph  of  that  which  is  true  more  than  the  triumph  of  that 
which  he  may  think  be  true. 

Let  me  repeat  that  the  primary  cause  of  monopoly  is  the  love 
of  money  and  the  desire  to  secure  the  fruits  of  monopoly,  but  I 
believe  that  falling  prices,  caused  by  the  rising  dollar,  have  con- 
tributed to  this  desire  and  intensified  it,  because  people,  seeing 
the  fall  in  prices  and  measuring  the  loss  of  investments,  have 
looked  about  for  some  means  to  protect  themselves  from  this  loss, 
and  they  have  joined  in  combinations  to  hold  up  prices  to  protect 
their  investments  from  a  loss  which  would  not  have  occurred  but 
for  the  rise  in  the  value  of  dollars  and  the  fall  in  the  level  of 
prices. 

Another  thing  that,  in  my  judgment,  has  aided  monopoly  is 
a  high  tariff.  Nobody  can  dispute  that  a  tariff  law,  an  import 
duty,  enables  a  trust  to  charge  for  its  product  the  price  of  a. 
similar  foreign  product  plus  the  tariff. 

501 


Now  some  have  suggested  that  to  put  everything  on  the  free 
list  that  trusts  make  would  destroy  the  trusts.  I  do  not  agree 
with  this  statement,  as  it  is  made  so  broadly.  I  believe  that  the 
high  tariff  has  been  the  means  of  extortion  and  that  it  has  aided 
trusts  to  collect  more  than  they  otherwise  could  collect.  But  I 
do  not  believe  you  could  destroy  all  trusts  by  putting  all  trust 
made  articles  on  the  free  list.  Why?  Because,  if  an  article  can 
be  produced  in  this  country  as  cheaply  as  it  can  be  produced 
abroad  the  trust  could  exist  without  the  aid  of  any  tariff,  although 
it  could  not  extort  so  much  as  it  could  with  the  tariff.  While 
some  relief  may  come  from  modifications  of  the  tariff,  we  cannot 
destroy  monopoly  until  we  lay  the  axe  at  the  root  of  the  tree  and 
make  monopoly  impossible  by  law. 

It  has  been  suggested  that  discrimination  by  railroads  has 
aided  the  trusts.  No  question  about  it.  If  one  man  can  secure 
from  a  railroad  better  rates  than  another  man,  he  will  be  able  to 
run  the  other  man  out  of  business.  And  there  is  no  question  that 
discrimination  and  favoritism  secured  by  one  corporation  against 
a  rival  have  been  largely  instrumental  in  enabling  the  favored 
corporation  to  secure  practically  a  complete  monopoly.  Now 
that  can  be  remedied  by  laws  that  will  prevent  this  discrimination, 
but  when  we  prevent  the  discrimination,  when  we  place  every 
producer  upon  the  same  footing  and  absolutely  prevent  favorit- 
ism, monopoly  may  still  exist.  The  remedy  must  go  farther.  It 
must  be  complete  enough  to  prevent  the  organization  of  a  mo- 
nopoly. 

Now  what  can  be  done  to  prevent  the  organization  of  a  mo- 
nopoly? I  think  we  differ  more  in  remedy  than  we  do  in  our 
opinion  of  the  trust.  I  venture  the  opinion  that  few  people  will 
defend  monopoly  as  a  principle,  or  a  trust  organization  as  a  good 
thing,  but  I  imagine  our  great  difference  will  be  as  to  remedy, 
and  I  want,  for  a  moment,  to  discuss  the  remedy. 

We  have  a  dual  form  of  government.  We  have  a  state  gov- 
ernment and  a  federal  government,  and  while  this  dual  form^  of 
government  has  its  advantages,  and  to  my  mind  advantages  which 
can  hardly  be  overestimated,  yet  it  also  has  its  disadvantages. 
When  you  prosecute  a  trust  in  the  United  States  court  it  hides 
behind  state  sovereignty,  and  when  you  prosecute  it  in  the  state 
court  it  rushes  to  cover  under  federal  jurisdiction — and  we  have 
had  some  difficulty  in  determining  a  remedy. 

I  believe  we  ought  to  have  remedies  in  both  state  and  nation, 

and  that  they  should  be  concurrent  remedies.     In  the  first  place, 

.  every  state  has,  or  should  have,  the  right  to  create  any  private 

'  corporation  which  in  the  judgment  of  the  people  of  the  state  is 

502 


conducive  to  the  welfare  of  the  people  of  that  state.  I  believe  we 
can  safely  intrust  to  the  people  of  a  state  the  settlement  of  a  ques- 
tion which  concerns  them.  If  they  create  a  corporation  and  it 
becomes  destructive  of  their  best  interests  they  can  destroy  that 
corporation,  and  we  can  safely  trust  them  both  to  create  and  anni- 
hilate if  conditions  make  annihilations  necessary.  In  the  second 
place  the  state  has,  or  should  have,  the  right  to  prohibit  any  for- 
eign corporation  from  doing  business  in  the  state,  and  it  has  or 
should  have  the  right  to  impose  such  restrictions  and  limitations 
as  the  people  of  the  state  may  think  necessary  upon  foreign  cor- 
porations doing  business  in  the  state.  In  other  words,  the  people 
of  the  state  not  only  should  have  a  right  to  create  the  corporations 
they  want,  but  they  should  be  permitted  to  protect  themselves 
against  any  outside  corporation. 

But  I  do  not  think  this  is  sufficient.  I  believe,  in  addition 
to  a  state  remedy,  there  must  be  a  federal  remedy,  and  I  believe 
Congress  has,  or  should  have,  the  power  to  place  restrictions  and 
limitations,  even  to  the  point  of  prohibition,  upon  any  corpora- 
tion organized  in  any  state  that  wants  to  do  business  outside  of 
the  state.  I  say  that  Congress  has,  or  should  have,  power  to  place 
upon  the  corporation  such  limitations  uid  restrictions,  even  to 
the  point  of  prohibition,  as  may  to  Congress  seem  necessary  for 
the  protection  of  the  public. 

Now  I  believe  that  these  concurrent  remedies  will  prove 
effective.  To  repeat,  the  people  of  every  state  shall  first  decide 
whether  they  want  to  create  a  corporation ;  they  shall  also  decide 
whether  they  want  any  outside  corporation  to  do  business  in  the 
state,  and  if  so,  upon  what  conditions;  and  then  Congress  shall 
exercise  the  right  to  place  upon  every  corporation  doing  business 
outside  of  the  state  in  which  it  is  organized  such  limitations  and 
restrictions  as  may  be  necessary  for  the  protection  of  the  public. 

I  do  not  believe  that  the  people  of  one  state  can  rely  upon 
the  people  of  another  state  in  the  management  of  corporations. 
And  I  will  give  you  a  reason.  I  have  here  a  letter  that  was  sent 
out  by  a  Delaware  corporation  with  an  office  in  New  York.  It 
is  a  most  remarkable  document,  the  most  remarkable  document 
on  this  subject  that  has  ever  fallen  under  my  observation.  "We 
have  talked  about  the  state  of  Few  Jersey  having  a  law  favorable 
to  trusts.  I  have  a  letter  here  which  shows  that  in  Delaware 
they  adopted  a  law  for  the  purpose  of  making  Delaware  more 
friendly  to  the  trusts  than  New  Jersey.  Let  me  read  the  letter. 
It  is  a  little  long,  but  it  will  repay  reading. 

"The  state  of  Delaware  has  just  adopted  the  most  favorable 
of  existing  general  corporation  laws,  one  marking  a  forward  step 

503 


in  the  evolution  of  corporations.  It  does  not  encourage  reckless 
incorporation  nor  permit  the  existence  of  wild-cat  companies,  but 
it  furnishes  at  the  least  expense  ample  rights  to  stockholders,  and 
reduces  restrictions  upon  corporate  action  to  the  minimum.  The 
enactment  is  not  the  result,  as  in  the  case  of  most  states,  of  hesi- 
tating, halting,  enacting,  amending  and  repealing,  but  is  a  logical 
and  systematic  measure  framed  by  a  committee  of  able  lawyers 
appointed  by  the  legislature  to  examine  the  various  statutes  of 
the  various  states  and  prepare  a  bill  which  should  embody  the 
good  and  eliminate  the  bad  points  of  existing  law.  The  law  is 
based  broadly  upon  that  of  the  state  of  New  Jersey,  and  embraces 
all  the  beneficial  provisions  and  safeguards  found  in  the  laws  of 
that  state.  It  has,  however,  in  many  respects  advanced  far  be- 
yond New  Jersey,  and  makes  Delaware  a  much  more  attractive 
home  for  business  corporations.  In  the  following  salient  pro- 
visions the  Delaware  and  New  Jersey  law  are  substantially  iden- 
tical, namely:  Any  three  persons  may  organize  a  corporation; 
second,  it  may  engage  in  any  lawful  business  excepting  banking; 
third,  its  existence  may  be  perpetual  or  limited;  fourth,  it  may 
purchase  and  deal  in  real  or  personal  property  wherever  situated 
and  to  any  desired  amount ;  fifth,  it  may  be  a  mortgagee  or  mort- 
gagor; sixth,  it  may  conduct  business  anywhere  in  the  world; 
seventh,  stock  may  be  issued  for  property  purchased  (and  in  Del- 
aware for  services  rendered)  and  in  the  absence  of  fraud  the  judg- 
ment of  the  directors  as  to  the  value  of  such  property  or  services 
is  conclusive;  eighth,  it  may  easily  wind  up  its  affairs  and  dis- 
solve itself;  ninth,  its  authorized  capital  stock  need  not  be  more 
than  $2,000  and  only  $1,000  of  this  need  be  subscribed  for;  tenth, 
the  amount  of  capital  stock  which  it  may  issue  is  unlimited ;  elev- 
enth, it  may  file  its  certificate  of  •  incorporation  and  even  com- 
mence business  before  any  sum  whatever  is  paid  in;  twelfth,  it 
may  have  different  classes  of  stock,  with  different  privileges  or 
restrictions ;  thirteenth,  the  charter  may  be  easily  amended ;  four- 
teenth, only  one  director  need  be  a  resident  of  Delaware;  fif- 
teenth, the  capital  stock  may  be  easily  diminished  or  increased ; 
sixteenth,  the  corporation  may  be  readily  merged  or  consolidated 
into  other  corporations;  seventeenth,  it  may  own  and  vote  upon 
the  stock  of  other  corporations;  eighteenth,  the  incorporators 
may  or  may  not  limit  the  authority  of  the  directors  as  to  the  lia- 
bilities. 

"The  Delaware  law  possesses  the  following  decided  advan- 
tages: First,  the  original  fee  to  be  paid  for  incorporation  is 
small — about  three-fourths  of  that  in  New  Jersey,  for  instance; 
second,  the  annual  tax  is  very  small,  one-half  that  in  New  Jersey. 

504 


Delaware  is  a  small  state,  and  does  not  need  a  very  large  revenue. 
Third,  stockholders  and  directors  may  hold  their  meetings  wher- 
ever they  please,  and  need  never  meet  in  the  state  of  Delaware. 
(New  Jersey  stockholders  must  meet  in  that  state)."  You  see 
it  is  a  decided  advantage  over  the  New  Jersey  law  in  that  respect. 
"Fourth,  the  original  stock  and  transfer  books  (which  in  a  New 
Jersey  corporation  must  be  kept  in  the  state),  may  be  kept  in 
or  out  of  Delaware  in  the  discretion  of  the  company.  Fifth,  the 
examination  of  the  books  by  intermeddlers  is  much  more  difficult 
under  the  Delaware  law  than  under  the  laws  of  any  other  state. 

"Sixth,  the  liability  of  the  stockholders  is  absolutely  limited 
when  the  stock  has  once  been  issued  for  cash,  property  or  services. 
Seventh,  stock  may  be  issued  in  compensation  for  services  ren- 
dered, and  in  the  absence  of  fraud  in  the  transaction,  the  judg- 
ment of  the  directors  as  to  the  value  of  such  services  is  con- 
clusive. (In  New  Jersey  authority  is  given  to  issue  stock  for 
property,  but  not  for  service).  Eighth,  for  certain  important 
classes  of  corporations,  as,  for  instance,  railroads,  railway,  tele- 
graph, cable,  electric  light,  steam  heating,  power,  gas  piping 
lines,  and  sleeping  car  companies,  the  advantage  is  still  more 
marked." 

I  wish  we  had  some  way  of  knowing  what  the  additional  ad- 
vantages are  after  having  read  the  ordinary  advantages. 

"Ninth,  the  annual  report  of  a  Delaware  corporation  is  re- 
quired to  give  no  secret  or  confidential  information. 

"Tenth,  the  certificate  need  not  show  nor  need  public  record 
be  in  any  way  made  of  the  amount  of  stock  subscribed  by  any 
in  corporator." 

And  then  the  letter  adds:  "This  company  is  authorized  to 
act  as  the  agent  and  trustee  of  corporations  organized  under  the 
Delaware  law.  It  will  maintain  the  principal  office  of  the  com- 
pany in  Delaware  and  keep  an  asrent  in  charge  within  the  state. 
It  is  formed  for  the  purpose  of  facilitating  the  incorporation  of 
companies  in  Delaware,  and  of  aiding  them  to  comply,  at  a  mini- 
mum expense,  with  the  requirements  of  the  Delaware  law.  "We 
are  ready  to  aid  and  give  full  information  to  incorporators  or 
their  counsel.  "We  do  not  interfere  between  attorney  and  client. 
"We  do  not  conduct  a  law  business.  Copies  of  the  Delaware  law, 
blank  forms  of  information  concerning  Delaware  corporations 
furnished  on  application. 

"All  communications  to  us  are  confidential." 

A  voice  from  the  gallery — Colonel,  Delaware  and  New  Jersey 
are  both  Democratic  states,  are  they  not? 

Mr.  Bryan — They  were  not  in  1896. 

505 


Another  voice  from  the  gallery — Has  the  gentleman  any  more 
questions  to  put? 

Mr.  Bryan — I  am  very  glad  to  have  questions  asked,  because 
we  are  seeking  the  truth. 

I  have  read  you  this  letter  in  order  to  show  you  that  where  a 
state  can  gain  an  advantage  from  the  incorporation  of  these 
great  aggregations  of  wealth,  it  is  not  safe  to  place  the  people 
of  other  states  at  the  tender  mercies  of  the  people  of  such  a  state 
as  may  desire  to  collect  its  running  expenses  from  the  taxation 
of  corporations  organized  to  prey  upon  people  outside. 

I  read  the  letter  to  show  how  impossible  it  is  for  the  people 
in  one  state  to  depend  for  protection  upon  the  people  in  another 
state;  and  while,  as  I  say,  I  believe  the  people  of  every  state 
should  have  the  power  to  create  corporations  and  to  restrain,  to 
limit,  and,  if  necessary,  to  annihilate,  yet  I  believe  that  no  com- 
plete remedy  will  be  found  for  the  trust  until  the  federal  govern- 
ment, with  a  power  sufficiently  comprehensive  to  reach  into 
every  nook  and  corner  of  the  country,  lays  its  hands  upon  these 
trusts  and  declares  that  they  shall  no  longer  exist. 

I  am  here  to  hear,  to  receive  information,  and  to  adopt  any 
method  that  anybody  can  propose  that  looks  to  the  annihilation 
of  the  trusts. 

One  method  has  occurred  to  me,  and  to  me  it  seems  a  complete 
method.  It  may  not  commend  itself  to  you.  If  you  have  some- 
thing better  I  shall  accept  it  in  the  place  of  this  which  I  am  about 
to  suggest.  But  the  method  that  occurs  to  me  is  this :  That  Con- 
gress should  pass  a  law  providing  that  no  corporation  organized 
in  any  state  should  do  business  outside  cf  the  state  in  which  it  is 
organized  until  it  receives  from  some  power  created  by  Congress 
a  license  authorizing  it  to  do  business  outside  of  its  own  state. 
Now,  if  the  corporation  must  come  to  this  body  created  by  Con- 
gress to  secure  permission  to  do  business  outside  of  the  state, 
then  the  license  can  be  granted  upon  conditions  which  will,  in 
the  first  place,  prevent  the  watering  of  stock ;  in  the  second  place, 
prevent  monopoly  in  any  branch  of  business,  and,  third,  provide 
for  publicity  as  to  all  of  the  transactions  and  business  of  the  cor- 
poration. 

A  voice — Colonel,  would  such  a  law  be  constitutional? 

Mr.  Bryan — I  was  going  to  come  to  that.  I  am  glad  you 
mentioned  it.  What  I  mean  to  say  is  that  Congress  ought  to  pass 
such  a  law.  If  it  is  unconstitutional  and  so  declared  by  the  Su- 
preme Court,  I  am  in  favor  of  an  amendment  to  the  Constitution 
that  will  give  to  Congress  power  to  destroy  every  trust  in  the 
country.  The  first  condition  which  I  suggest  is  that  no  water 

506 


should  be  allowed  in  the  stock.  I  do  not  agree  with  those  who  say 
it  is  a  matter  entirely  immaterial  whether  a  corporation  has  water 
in  its  stock  or  not.  It  may  be  true  that  in  the  long  run,  if  you 
are  able  to  run  as  long  as  the  corporation  can,  the  stock  will  fall 
to  its  -natural  level,  but  during  all  that  time  the  harm  goes  on ; 
during  all  that  time  the  trust  demands  the  right  to  collect  divi- 
dends upon  capital  represented  by  no  money  whatever.  I  do 
not  believe  that  any  state  should  permit  the  organization  of  a 
corporation  with  a  single  drop  of  water  in  the  stock  of  that  cor- 
poration. The  farmer  cannot  innate  the  value  of  his  land  by 
watering  the  value  of  that  land.  The  merchant  in  the  store  can- 
not innate  the  value  of  the  goods  upon  his  shelves.  Why  should 
the  corporation  be  permitted  to  put  out  stock  that  represents  no 
real  value? 

Why,  there  are  instances  where  there  are  $4  of  water  for  $1 
of  money. 

A  voice — Seven. 

Mr.  Bryan — Yes,  a  man  suggests  seven.  Do  I  hear  a  higher 
bid?  I  have  known  it  to  be  twelve — but  I  am  a  conservative  man, 
and  I  must  maintain  my  reputation.  No  man  can  defend  stock 
that  does  not  represent  money  invested,  and  only  in  the  case  of  a 
monopoly  can  you  secure  dividends  upon  stock  that  does  not 
represent  money  invested. 

We  had  a  law  in  Nebraska  that  was  intended  to  regulate  rail- 
road rates.  One  railroad  in  our  state  was  capitalized  and  bonded 
for  more  than  five  times  what  it  would  cost  to  duplicate  the  road, 
and  yet  the  judge  held  that  in  fixing  rates  and  in  determining 
what  was  fair  compensation  for  the  railroad,  we  had  to  consider 
the  watered  stock  as  well  as  the  actual  value  of  that  road,  and 
when  the  case  went  to  the  Supreme  Court,  the  Supreme  Court 
rendered  a  decision  which,  while  I  cannot  quote  its  exact  lan- 
guage, was  in  substance  this :  That  in  determining  what  was  a 
reasonable  rate  we  had  to  take  into  consideration  a  number  of 
things  besides  the  present  value  of  that  road,  measured  by  the 
cost  of  reproduction.  If  the  watering  of  the  stock  is  permitted, 
then  the  cry  of  the  innocent  purchaser  is  raised,  and  you  will 
be  told  that  you  must  protect  the  man  who  bought  the  stock. 
No  man  ought  to  stand  in  the  position  of  an  innocent  purchaser 
who  buys  stock  in  a  corporation,  if  that  stock  does  not  represent 
actual  money  invested,  because  he  can  find  out  what  the  stock 
stands  for  if  he  will  only  investigate,  but,  as  a  matter  of  fact,  the 
holders  of  watered  stock  are  able  to  collect  dividends.  Now,  if 
this  license  is  granted,  then  the  first  condition  can  be  that  any 
corporation  desiring  to  do  business  outside  of  the  state  in  which 

507 


it  is  organized  shall  bring  to  that  board  or  body  proof  that  that 
stock  is  Itona  fide  and  that  there  is  no  water  in  it.  In  my  judg- 
ment, when  you  take  from  monopoly  the  power  to  issue  stock 
not  represented  by  money,  you  will  go  more  than  half  the  way 
toward  destroying  monopoly  in  the  United  States. 

The  law  should  provide  for  publicity.  As  has  been  well  said 
by  men  who  have  spoken  here,  corporations  cannot  claim  that 
they  have  a  right,  or  that  it  is  necessary,  to  cover  their  transac- 
tions with  secrecy,  and  when  you  provide  for  publicity  so  that  the 
public  can  know  just  what  there  is  in  the  corporation,  just  what 
it  is  doing,  and  just  what  it  is  making,  you  will  take  another  long 
step  toward  the  destruction  of  monopoly. 

But  I  am  not  willing  to  stop  there.  I  do  not  want  to  go  one 
01  two  steps,  I  want  to  go  all  the  way  and  make  a  monopoly  abso- 
lutely impossible.  And,  therefore,  as  a  third  condition,  I  sug- 
gest that  this  license  shall  not  be  granted  until  the  corporation 
shows  that  it  has  not  had  a  monopoly,  and  is  not  attempting  a 
monopoly  of  any  branch  of  industry  or  of  any  article  of  mer- 
chandise— and  then  provide  that  if  the  law  is  violated  the  license 
can  be  revoked.  I  do  not  believe  in  the  government  giving  priv- 
ileges to  be  exercised  by  a  corporation  without  reserving  the  right 
to  withdraw  them  when  those  privileges  become  hurtful  to  the 
people. 

Now,  I  may  be  mistaken,  but  as  I  have  studied  the  subject 
it  has  seemed  to  me  that  this  method  of  dealing  with  the  trusts 
would  prove  an  effective  method,  but  if  you  once  establish  the 
system  and  require  the  license,  then  Congress  can,  from  year  to 
year,  add  such  new  conditions  as  may  be  necessary  for  the  pro- 
tection of  the  public  from  the  greed  and  avarice  of  great  aggre- 
gations of  wealth.  I  do  not  go  so  far  as  some  do  and  say  that 
there  shall  be  no  private  corporations,  but  I  say  this,  that  a  cor- 
poration is  created  by  law,  that  it  is  created  for  the  public  good 
and  that  it  should  never  be  permitted  to  do  a  thing  that  is  injuri- 
ous to  the  public,  and  that  if  any  corporation  enjoys  any  privi- 
leges to-day  which  are  hurtful  to  the  public  those  privileges  ought 
•  to  be  withdrawn  from  it.  In  other  words,  I  am  willing  that  we 
should  first  see  whether  we  can  preserve  the  benefits  of  the  cor- 
poration and  take  from  it  its  possibilities  for  harm. 

A  delegate — Would  you  apply  that  to  rich  individuals  also, 
suppose  Eockefeller  did  it  on  his  own  account? 

Mr.  Bryan- — We  have  not  reached  a  point  yet  where  an  in- 
dividual has  been  able  to  do  harm,  and,  in  my  judgment,  if  we 
would  abolish  those  laws  that  grant  special  privileges  and  make 
some  men  the  favorites  of  the  government,  no  man,  by  his  own 

508 


brain  and  muscle,  could  ever  earn  enough  money  to  be  harmful 
to  the  people. 

A  delegate — What  will  you  say  to  the  banks  reporting  five 
hundred  millions  of  money  in  the  vaults  and  four  billions  of 
loans? 

Mr.  Bryan — Well,  I  would  say  it  would  not  be  safe  to  have  all 
the  loans  collected  at  once. 

Following  out  the  suggestion  the  gentleman  has  made,  I 
want  to  add  to  what  I  have  said  to  this  extent :  My  contention  is 
that  we  have  been  placing  the  dollar  above  the  man;  that  we  have 
been  picking  out  favorites  and  bestowing  upon  them  special  priv- 
ileges, and  every  advantage  we  have  given  them  has  been  given 
them  to  the  detriment  of  other  people.  My  contention  is  that 
there  is  a  vicious  principle  running  through  the  various  policies 
which  we  have  been  pursuing;  that  in  our  taxation  we  have  been 
imposing  upon  the  great  struggling  masses  the  burden  of  govern- 
ment, while  we  have  been  voting  the  privileges  to  a  few  people 
who  will  not  pay  their  share  of  the  expenses  of  the  government. 

Every  unjust  tax  law  is  an  indirect  form  of  larceny.  If,  for 
instance,  a  man  who  ought  to  pay  $10  only  pays  $5,  and  one  who 
ought  to  pay  only  $5  pays  $10,  the  law  that  compels  this  contribu- 
tion from  these  two  men  virtually  takes  $5  from  one  man's  pocket 
and  puts^that  $5  into  the  other  man's  pocket,  and  I  have  claimed 
that  when  we  collected  our  taxes  we  were  making  the  poor  people 
pay  not  only  their  own  share,  but  the  share  of  the  men  whom 
they  have  no  chance  to  meet  at  the  summer  resorts.  I  have  been 
gratified  to  note  the  progress  that  you  have  been  making  in  Illi- 
nois towards  more  equitable  distribution  of  the  burdens  of  gov- 
ernment. I  heard  it  stated  that  there  was  a  time  only  a  few 
years  ago  when  the  agricultural  implements  owned  by  the  farm- 
ers living  within  the  city  limits  of  Chicago  were  assessed  for  more 
than  all  the  money  in  Chicago  returned  for  taxation  by  private 
citizens.  I  do  not  know  whether  it  was  true  or  not,  but  I  saw  it 
stated  as  a  fact.  There  are  some  people  who  ha.ve  visible  prop- 
erty, others  who  have  invisible  property,  and  the  visible  property 
is  always  taxed.  The  invisible  property  has  too  often  escaped, 
and  as  a  result  the  people  owning  visible  property  have  not  only 
paid  their  own  taxes,  but  the  taxes  that  should  have  been  paid 
by  the  owners  of  invisible  property.  I  have  advocated  an  income 
tax  because  I  believe  it  the  most  just  tax.  I  do  not  mention  it 
to  argue  the  question  here,  because  I  want  to  avoid  the  discussion 
of  any  questions  that  might  be  considered  partisan.  If  the  gov- 
ernment will  quit  picking  out  favorites  and  follow  the  doctrine 
of  equal  rights  to  all  and  special  privileges  to  no  man — I  have 

509 


no  fear  that  any  man  by  his  own  hrain  or  his  own  muscle  will  be 
able  to  secure  a  fortune  so  great  as  to  be  a  menace  to  the  welfare 
of  his  fellow  men.  If  we  secure  a  government  whose  foundations 
are  laid  in  justice  and  laws  exemplifying  the  doctrine  of  equality 
before  the  law,  if  we  can  secure  such  a  government  and  such  laws, 
and  wealth  is  then  accumulated  to  a  point  where  it  becomes  dan- 
gerous, we  can  meet  that  question  when  it  arises,  and  I  am  will- 
ing to  trust  the  wisdom  of  society  to  meet  every  question  that 
arises,  and  remedy  every  wrong. 

Sigmund  Zeisler  (Attorney,  Chicago) — What  will  you  do, 
colonel,  with  the  multi-millionaires  that  already  exist?  Sup- 
pose they  should  hold  and  acquire  all  the  industries,  all  the  fac- 
tories, and  particularly  industries? 

Colonel  Bryan — Do  you  mean  before  our  laws  go  into  opera- 
tion? 

Mr.  Zeisler — The  multi-millionaires  that  already  exist. 

Colonel  Bryan — In  the  first  place,  private  individuals  have 
not  been  able  to  secure  monopolies,  and  are  not  likely  to  do  so. 
As  to  the  multi-millionaires  now  in  existence,  I  would  wait  and 
see  whether  they  would  die  off  soon  enough  to  relieve  the  coun- 
try of  danger.  Life  is  short.  If,  however,  their  accumulations 
should  become  a  menace^  I  would  then  consider  what  measures 
would  be  necessary  for  the  protection  of  society.  And  this  brings 
me  to  what  I  regard  as  a  very  important  branch  of  this  subject. 
I  am  glad  the  question  was  asked ;  it  calls  attention  to  the  differ- 
ence between  an  individual  and  a  corporation.  Every  trust  rests 
upon  a  corporation — at  least  that  rule  is  so  nearly  universal  that 
I  think  we  can  accept  it  as  a  basis  for  legislation.  Every  trust 
rests  upon  a  corporation,  and  every  corporation  is  a  creature 
of  law.  The  corporation  is  a  man-made  man. 

When  God  made  man  as  the  climax  of  creation  he  looked 
upon  his  work  and  said  that  it  was  good,  and  yet  when  God  fin- 
ished his  work  the  tallest  man  was  not  much  taller  than  the 
shortest,  and  the  strongest  man  was  not  much  stronger  than  the 
weakest.  That  was  God's  plan.  We  looked  upon  his  work  and 
said  that  it  was  not  quite  as  good  as  it  might  be,  and  so  we  made 
a  fictitious  person  called  a  corporation  that  is  in  some  instances 
a  hundred  times — a  thousand  times — a  million  times  stronger 
than  the  God-made  man.  Then  we  started  this  man-made  giant 
out  among  the  God-made  men.  When  God  made  man  he  placed 
a  limit  to  his  existence,  so  that  if  he  was  a  bad  man  he  could 
not  do  harm  long,  but  when  we  made  our  man-made  man  we 
raised  the  limit  as  to  age.  In  some  states  a  corporation  is  given 
perpetual  life. 

510 


When  God  made  man  he  breathed  into  him  a  soul  and  warned 
him  that  in  the  next  world  he  would  be  held  accountable  for  the 
deeds  done  in  the  flesh,  but  when  we  made  our  man-made  man 
we  did  not  give  him  a  soul,  and  if  he  can  avoid  punishment  in 
this  world  he  need  not  worry  about  the  hereafter. 

My  contention  is  that  the  government  that  created  must  re- 
tain control,  and  that  the  man-made  man  must  be  admonished: 
"Remember  now  thy  Creator  in  the  days  of  thy  youth" — and 
throughout  thy  entire  life. 

Let  me  call  your  attention  again  to  this  distinction.  We  are 
not  dealing  with  the  natural  man;  we  are  not  dealing  with 
natural  rights.  We  are  dealing  with  the  man-made  man  and 
artificial  privileges. 

What  government  gives,  the  government  can  take  away. 
What  the  government  creates,  it  can  control;  and  I  insist  that 
both  the  state  government  and  the  federal  government  must  pro- 
tect the  God-made  man  from  the  man-made  man. 

I  have  faith  that  these  questions  will  be  settled  and  settled 
right,  but  I  want  to  protest  against  this  doctrine  that  the  trust 
is  a  natural  outgrowth  of  natural  laws.  It  is  not  true.  This 
trust  is  the  natural  outgrowth  of  unnatural  conditions  created  by 
man-made  laws.  There  are  some  who  would  defend  everything 
good  or  bad,  on  the  ground  that  it  is  destiny — and  that  you  can- 
not inquire  into  it.  The  fact  that  it  is,  proves  that  it  is  right; 
the  fact  that  it  is,  proves  that  it  has  come  to  stay,  and  the  argu- 
ment most  frequently  made  in  defense  of  a  vicious  system  is  not 
that  it  is  right  and  ought  to  stay,  but  that  it  has  come  to  stay 
whether  you  like  it  or  not.  I  say  that  that  is  the  argument  that 
is  usually  advanced  in  behalf  of  an  error — it  is  here,  it  has  come 
to  stay — what  are  you  going  to  do  about  it? 

I  believe  that,  in  a  civilized  society,  the  question  is  not  what 
is,  but  what  ought  to  be^ — and  that  every  proposition  must  be 
arraigned  at  the  bar  of  reason.  If  you  can  prove  that  a  thing  is 
good,  let  it  stay,  but  if  you  cannot  prove  that  it  is  good  you 
cannot  hide  behind  the  assertion  that  it  is  here  and  that  you 
cannot  get  rid  of  it.  I  believe  that  the  American  people  can 
get  rid  of  anything  that  they  do  not  want — and  that  they  ought 
to  get  rid  of  everything  that  is  not  good.  I  believe  that  it  is  the 
duty  of  every  citizen  to  give  to  his  countrymen  the  benefit  of  his 
conscience  and  his  judgment,  and  cast  his  influence,  be  it  small 
or  great,  upon  the  right  side  of  every  question  that  arises.  In 
the  determination  of  questions  we  should  find  out  what  will 
make  our  people  great  and  good  and  strong  rather  than  what  will 
make  them  rich.  "A  good  name  is  rather  to  be  chosen  than  great 

511 


riches."  Shall  we  decide  the  ethics  of  larceny  by  discussing  how 
much  the  man  is  going  to  steal  or  the  chances  of  his  getting 
caught?  No,  my  friends,  we  must  decide  questions  upon  a  higher 
ground,  and  if  you  were  to  prove  to  me  that  a  monopoly  would 
reduce  the  price  of  the  articles  that  we  have  to  purchase,  I  would 
still  be  opposed  to  it  for  a  reason,  which  to  my  mind  overshadows 
all  pecuniary  arguments.  The  reason  is  this :  Put  the  industrial 
system  of  this  nation  in  the  hands  of  a  few  men,  and  let  them 
determine  the  price  of  raw  material,  the  price  of  the  finished 
product,  and  the  wages  paid  to  labor,  and  you  will  have  an  indus- 
trial aristocracy  beside  which  a  landed  aristocracy  would  be  an 
innocent  thing. 

1  may  be  in  error,  but,  in  my  judgment,  a  government  of  the 
people,  by  the  people,  and  for  the  people,  will  be  impossible  when 
a  few  men  control  all  the  sources  of  production  and  dole  out 
daily  bread  to  all  the  rest  on  such  terms  as  the  few  may  prescribe. 
I  believe  that  this  nation  is  the  hope  of  the  world.  I  believe  that 
the  Declaration  of  Independence  was  the  grandest  document 
ever  penned  by  human  hands.  The  truths  of  that  declaration  are 
condensed  into  four  great  propositions:  That  all  men  are  cre- 
ated equal;  that  they  are  endowed  with  inalienable  rights;  that 
governments  are  instituted  among  men  to  preserve  those  rights, 
and  that  governments  derive  their  just  powers  from  the  consent 
of  the  governed.  Such  a  government  is  impossible  under  an  in- 
dustrial aristocracy.  Place  the  food  and  clothing,  all  that  we 
eat  and  wear  and  use,  in  the  hands  of  a  few  people,  and  instead 
of  it  being  a  government  of  the  people,  it  will  be  a  government 
of  the  syndicates,  by  the  syndicates,  and  for  the  syndicates. 
Establish  such  a  government,  and  the  people  will  soon  be  pow- 
erless to  secure  a  legislative  remedy  for  any  abuse.  Establish 
such  a  system,  and  on  the  night  before  election  the  employees 
will  be  notified  not  to  come  back  on  the  day  after  election  unless 
the  trusts'  candidate  is  successful.  Establish  such  a  government, 
and  instead  of  giving  the  right  of  suffrage  to  the  people,  you 
will  virtually  give  the  right  of  suffrage  to  the  heads  of  monopo- 
lies, with  each  man  empowered  to  vote  as  many  times  as  he  has 
employees.  I  am  not  willing  to  place  the  laboring  men  of  this 
country  absolutely  at  the  mercy  of  the  heads  of  monopolies.  I 
am  not  willing  to  place  the  men  who  produce  the  raw  material 
absolutely  in  the  hands  of  the  monopolies  because  when  you  con- 
trol the  price  that  a  man  is  to  receive  for  what  he  produces,  you 
control  the  price  that  he  is  to  receive  for  his  labor  in  the  produc- 
tion of  that  thing. 

The  farmer  has  no  wages,  except  as  wages  are  measured  by 

512 


the  price  of  his  product ;  and  when  you  place  it  in  the  power  of  the 
trust  to  fix  the  price  of  what  the  farmer  sells,  you  place  it  in  the 
power  of  the  trust  to  lower  the  wages  that  the  farmer  receives 
for  his  work ;  and  when  you  place  it  in  the  power  of  the  trust  to 
raise  the  price  of  what  he  buys,  you  do  the  farmer  a  double 
injury,  because  he  burns  the  candle  at  both  ends  and  suffers  when 
he  sells  to  the  trust,  and  again  when  he  buys  of  the  trust. 

Some  people  have  tried  to  separate  the  laboring  man  who 
works  in  the  factory  from  the  laboring  man  who  works  on  the 
farm.  I  want  to  warn  the  laboring  men  in  the  factories  that 
they  cannot  separate  themselves  from  those  who  toil  on  the  farm 
without  inviting  their  own  destruction.  I  beg  the  laboring  men 
in  the  factories  not  to  join  with  the  monopolies  to  crush  the  farm- 
er, for  as  soon  as  the  farmer  is  crushed  the  laboring  man  will 
be  crushed,  and  in  a  test  of  endurance  the  farmer  will  stand  it 
longer  than  the  laboring  man. 

I  come  from  an  agricultural  state,  one  of  the  great  agricul- 
tural states  of  this  nation,  and  I  want  to  say  to  you  that  while 
our  people  are,  I  believe,  a  unit  against  the  trusts,  we  can  stand 
the  trusts  longer  than  the  laboring  man  can;  we  can  stand  all 
the  vicious  policies  of  government  longer  than  the  laboring  man 
can.  The  farmer  was  the  first  man  on  the  scene  when  civiliza- 
tion began,  and  he  will  be  the  last  one  to  disappear.  The  farmer 
wants  to  own  his  home;  he  ought  to  own  it.  I  think  that  this 
nation  is  safer  the  larger  the  proportion  of  home  owners.  I  want 
every  man  with  a  family  to  own  his  home,  the  farmer  wants  to 
own  his  home,  but  if  you  will  not  allow  him  to  own  his  home  he 
can  rent.  He  will  have  to  be  employed  to  work  the  farm. 

Take  his  farm  from  him  by  mortgage  if  you  like,  but  the  man 
who  forecloses  the  mortgage  and  buys  the  property  will  not  work 
the  farm.  He  will  need  the  farmer  to  work  for  him,  and  he  will 
have  to  give  the  farmer  enough  to  live  on  or  the  farmer  cannot 
work.  When  prices  fall  so  low  that  the  farmer  cannot  buy  coal 
he  can  burn  corn.  But  when  prices  fall  so  low  that  the  coal 
miner  cannot  buy  corn,  he  cannot  eat  coal.  You  can  drive  the 
farmer  down  so  that  he  cannot  buy  factory  made  goods,  but  his 
wife  can  do  like  the  wife  of  old — make  the  clothing  for  the  family 
off  of  the  farm,  but  when  you  close  your  factories  it  will  take  all 
of  the  accumulated  wealth  of  the  cities  to  feed  the  people  brought 
to  the  point  of  starvation  by  vicious,  greedy,  avaricious  legisla- 
tion. 

But,  my  friends,  why  should  we  try  to  see  who  can  hold  out 
the  longest  in  suffering?  Why  try  to  see  who  can  endure  the 
most  hardships  and  yet  live?  Why  not  try  to  see  who  can  con- 
si? 


tribute  most  to  the  greatness  and  to  the  glory  and  to  the  pros- 
perity of  this  nation?  Why  not  vie  with  each  other  to  see  who 
can  contribute  most  to  make  this  government  what  the  fathers 
intended  it  to  be?  For  one  hundred  years  this  nation  has  been 
the  light  of  the  world.  For  one  hundred  years  the  struggling 
people  of  all  nations  have  looked  to  this  nation  for  hope  and 
inspiration.  Let' us  settle  these  great  questions;  let  us  teach  the 
world  the  blessing  of  a  government  that  comes  from  the  people, 
let  us  show  them  how  happy  and  how  prosperous  people  can  be. 
God  made  all  men,  and  he  did  not  make  some  to  crawl  on  hands 
and  knees  and  others  to  ride  upon  their  backs.  Let  us  show  what 
can  be  done  when  we  put  into  actual  practice  the  great  principles 
of  human  equality  and  of  equal  rights.  Then  this  nation  will 
fulfill  its  holy  mission  and  lead  the  other  nations  step  by  step  in 
the  progress  of  the  human  race  toward  a  higher  civilization. 

Twice  after  he  had  finally  pushed  his  way  through  the  crowd 
which  rushed  forward  to  congratulate  him,  did  Mr.  Bryan  have  to 
rise  and  bow  his  acknowledgments  of  the  applause  which  ensued 
when  he  had  finished  speaking.  It  was  some  minutes  before  the 
chair  could  restore  quiet  and  introduce  James  H.  Eaymond,  of 
Chicago,  who  speaking  on  "Monopolies  Under  Patents  and  the 
Industrial  Effects  Thereof/'  said : 

JAMES  H.  EAYMOND. 

Chicago  Patent  Law  Association. 

General  and  unlimited  propositions  with  reference  to  our 
present  existence  and  to  proper  governmental  relations,  no  mat- 
ter how  glittering,  are  quite  unsafe  to  follow. 

To  cite  Garfield,  it  must  be  remembered  that  the  dead  level 
of  the  sea,  from  which  all  heights  and  depths  are  measured,  still 
remains. 

The  subject  assigned  to  me  is :  "Monopolies  under  Patents 
and  the  Industrial  Effects  Thereof." 

The  broad  statement  that  "all  monopolies  are  odious"  has 
been  oft  repeated,  but,  since  the  days  of  Magna  Charta,  has  been 
little  less  than  obnoxious  to  all  well  informed  .and  right  thinking 
men. 

A  corollary  to  this  proposition,  which  is  a  little  aside  from  my 
subject,  yet  worthy  of  note,  is  this:  Modern  history  has  abun- 
dantly demonstrated  and  the  established  law  of  this  and  of  other 

514 


lands  is  this,  that  all  laws,  regulations  and  established  customs, 
which  are,  in  a  general  sense,  in  restraint  of  trade  and  are  restric- 
tions upon  free  and  unlimited  competition,  are  not  illegal  and 
are  not  unwholesome.  Only  such  laws,  regulations  and  estab- 
lished customs  as,  either  temporarily  or  permanently,  are  con- 
trary to  the  general  welfare  of  society,  and  are  clearly  shown 
so  to  be,  should  be  prohibited. 

Certain  theorists  to  the  contrary  notwithstanding,  from  the 
days  of  tribal  relations  to  the  present  day,  all  society  or  associa- 
tion of  human  beings,  all  laws  and  all  governments  are,  in  the 
very  nature  of  things,  and  for  all  time  will  be,  based  upon  the 
difference  between  meum  and  tuum  or  upon  the  fundamental  idea 
of  personal  possession  and  exclusive  property  rights. 

I  can  have  no  argument  with,  and  it  is  difficult  to  exercise 
even  a  mental  sympathy  for,  those  iconoclasts,  who,  traversing 
these  historic  truths  and  denying  all  doctrines  of  exclusive  rights 
and  privileges,  are  attempting  to  pull  down  the  pillars  which 
sustain  the  framework  of  all  civilized  society.  In  all  right  basic 
theories  of  sociology,  the  foundation  of  the  structure  is  human 
nature  as  we  find  it  to  have  been,  to  be  and  to  continue.  The 
pillars  upon  this  foundation  are  three:  First,  the  individual 
consent  to  be  associated  with  others  for  common  purposes;  sec- 
ond, the  reservation  of  individual  rights  and  liberties,  which 
shall  not  interfere  with  the  personal  rights  and  liberties  of  the 
associates  or  traverse  the  necessary  police  powers  of  government; 
and,  third  and  foremost,  as  to  industrial  or  commercial  consid- 
erations, the  right  to  individual  property  and  exclusive  privi- 
leges. 

All  right  economic  conclusions  have  a  common  dual  premise, 
clearly  sounding  in  two  questions,  namely:  First,  What  are  the 
basic  conditions  of  our  present  existence  as  they  have  been 
throughout  historic  times  and  are  likely  to  be?  And,  second 
(those  conditions  being  truthfully  stated),  "What  do  the  laws  of 
thought  require  as  conclusions  concerning  any  plan  for  the  fu- 
ture? The  stern  facts  of  our  present  existence  and  our  experi- 
ences are  the  lamps  which  must,  with  honest  thought,  rather 
than  with  vagaries  and  theories  and  fads  which  have  no  relation 
thereto,  guide  onr  individual  and  our  cosmic  future. 

My  next  proposition,  which  certainly  is  self-evident,  is  this, 
namely,  that  progress  in  science  and  in  the  useful  arts  is  desira- 
ble. 

For  the  purpose  of  promoting  progress  in  science  and  in  the 
useful  arts,  the  framers  of  our  federal  Constitution,  with  char- 
acters which  came  from  the  cradle  of  suffering  and  were  molded 

515 


by  pious  purposes,  fully  familiar  with  the  then  effete  institutions 
of  the  Old  World,  where  monarchy  or  imperialism,  in  one  form 
or  another,  then  prevailed,  and  at  a  time  when  the  most  civilized 
nation  on  earth,  our  mother  country,  old  England,  was  operat- 
ing under  an  unwritten  constitution,  instead  of  the  code,  with 
which  it  is  now  struggling — at  such  a  time  inspired  men  com- 
piled and  created  an  instrument  greater,  broader,  deeper,  higher 
and  more  lasting  in  its  effects  than  Magna  Charta,  because  it 
dealt  less  with  temporary  conditions  and  more  with  the  utter- 
most of  the  principles  of  individual  sovereignty  and  personal  lib- 
erty— at  such  a  time  and  under  such  conditions  these  inspired 
men  in  the  United  States  Constitution,  as  a  paragraph  in  Section 
8  of  Article  I,  gave  to  our  Congress  the  following  legislative 
power : 

"To  promote  the  progress  of  science  and  the  useful  arts,  by 
securing,  for  a  limited  time,  to  authors  and  inventors  the  exclu- 
sive right  to  their  respective  writings  and  discoveries." 

That  written  Constitution  remains  to-day  as  the  safeguard 
of  our  liberties  and  as  the  basis  of  all .  our  political  and  social 
institutions. 

Many  amendments  have  been  made  to  it,  but  none  have,  even 
indirectly,  affected  the  provision  I  have  quoted.  It  has  been 
embodied  and  emphasized  in  many  acts  of  Congress,  which  have 
been  uniformly  in  furtherance  of  its  purpose  and  provisions ;  but 
its  purposes  have  been  thwarted  and  its  provisions  have  been  dis- 
regarded by  foolish  resolutions  of  mass-meetings  and  by  some 
decisions  of  our  federal  courts  containing  "judge-made  law." 

A  proper  and  a  profitable  answer  to  any  question  depends 
upon  the  proper  putting  of  the  question.  Let  me  ask  some  ques- 
tions, and  leave  them  with  you  to  answer : 

Was  this  constitutional  provision  a  wise  one? 

Has  the  first  century  of  our  existence  demonstrated  that 
operations  under  it  have  contributed  to  our  progress  in  science, 
in  arts  and  in  comforts? 

Has  our  patent  system  aided  us  in  our  competition  with  other 
groups  of  humanity  under  other  government?? 

Has  it  markedly  contributed  to  all  of  the  other  governmental 
institutions  of  which  we  boast;  and 

Can  we  separate  it  from  any  line  of  our  progress  since  the 
time  when  George  Washington,  Thomas  Jefferson,  and  the  attor- 
ney-general signed  the  first  letters  patent  for  an  invention, 
which  pertained  to  "Matrices  in  Printing,"  on  the  31st  day  of 
January,  1791? 

516 


There  can  be  no  equivocation  as  to  the  proper  answers  to 
these  questions. 

Our  present  internal  disturbances  require,  and  especially  on 
occasions  like  this,  that  such  fundamental  questions  should  be 
asked,  rather  than  questions  which  relate  to  this  temporary  as- 
sociation of  capital  or  to  that  union  of  particular  interests  in 
some  line  of  labor,  dominated,  as  most  of  the  unions  are,  by  a 
brainy  individual  or  two. 

Temporary  irruptions  have,  from  time  to  time,  appeared  upon 
our  body  politic,  some  of  which  have  affected  our  patent  system. 
New  ones  are  there  now.  They  itch  and  are  distressing  and, 
for  the  most  part,  are  promoted  by  doctrinaires  and  theorists,  by 
seekers  for  office,  or  by  others  who  have  no  visible  means  of  sup- 
port. We  may,  however,  congratulate  ourselves  that,  as  a  rule, 
these  irruptions  cure  themselves  without  the  aid  of  the  adminis- 
tration of  violent  drugs,  and  they  purify  the  blood. 

In  connection  with  my  subject,  I  speciallv  refer  to  the  "gran- 
ger movement,"  which  began  in  1870-71  with  an  onslaught  upon 
the  railroads  and  which  provoked,  and  was  immediately  followed, 
by  the  "Grangers,"  with  an  onslaught  upon  our  patent  system. 

Blackmailers  put  up  at  hotels  at  county-seats  throughout  the 
middle  and  the  then  western  states.  They  sent  their  "walking- 
delegates"  throughout  the  county  to  find  farmers  who  had  driven 
a  pipe  into  the  ground  to  reach  water.  The  agent  then  sent 
formal  notices,  couched  in  legal  cant,  to  the  farmers  that  they 
had  infringed  the  "Driven  Well  Patent"  granted  to  Mr.  Green 
(who  really  was  an  inventor  and  was  entitled  to  a  reward),  and 
the  notice  was  that  the  farmer  must  appear  at  the  hotel  and  pay 
so  much  per  pipe  or  he  would  be  sued  in  a  United  States  court 
twenty,  and,  in  some  cases,  one  hundred  and  fifty  miles  from  his 
habitat. 

The  walking-delegates  of  those  days  in  those  matters  were 
called  "patent  sharks."  That  race  has  become  extinct,  and  we 
do  not  now  even  hear  that  name  any  more. 

The  frown  of  public  sentiment  stopped  the  nefarious  prac- 
tices, of  which  I  have  cited  an  example,  and,  during  the  decades 
ending  with  1890,  they  practically  ceased  to  exist,  because  the 
irruptions  were  cured  by  their  own  virus  and  our  patent  system 
has  remained  during  the  present  decade,  with  constitutional 
foundations,  as  a  permanent  institution  of  our  social  fabric  and 
as  a  primary  factor  in  our  industrial  progress. 

Is  not  this  part  of  our  history  a  demonstration  of  the  conclu- 
sion that  all  monopolies,  which  are  contrary  to  the  public  good 
and  are  really  obnoxious,  are  necessarily  so  exercised  as  that  they, 

517 


without  unnecessary  agitation  and  public  disturbances,  are 
buried  by  their  own  weight  or  are  killed  by  their  own  virus, 
leaving  behind  them  purified  business  conditions? 

Certainly  no  monopolies  in  the  world  have  such  sure  founda- 
tions as  the  ones  of  which  I  am  speaking,  and  history  shows 
that,  if  they  be  abused  in  their  exercise  and  thereby  become  ob- 
noxious, they  individually  die  a  natural  death,  leaving  the  insti- 
tution which  created  them  for  the  public  good,  quite  intact. 

Let  us  now  pause  to  state  two  facts  and  to  ask  two  questions 
concerning  them,  which  further  questions  also  need  not  be  now 
answered  in  words : 

First — In  1873  the  balance  between  our  exports  and  our  im- 
ports was  a  balance  against  us  of  one  hundred  and  twenty  million 
dollars,  and  on  June  30,  1899,  the  balance  was  five  hundred  and 
thirty  million  dollars  in  our  favor. 

Has  not  the  encouragement  of  our  patent  system  been  a  prime 
factor  in  bringing  about  this  marvelous  change? 

Second — Our  inventors  have  been  taxed  by  fees  for  the  sup- 
port of  the  patent  office  in  an  excess  over  the  expenditures 
allowed  by  Congress  for  that  office,  with  this  result,  that  there 
now  remains  in  the  federal  treasury  a  balance  of  these  fees,  as  of 
December  31, 1898,  of  $4,972,976.34,  and  the  Congress  continues 
to  treat  that  department  most  niggardly,  and  unintelligent  and 
uninformed  people  are  carping  at  its  work. 

The  question,  which  I  leave  unanswered,  as  to  this  plain  state- 
ment of  facts,  may  be  statedjn  a  homely  manner  thus : 

Has  not  Congress  and  some  of  our  courts  and  some  of  the 
associations  of  our  people,  in  a  very  midnight  of  darkness  of  in- 
formation and  thought,  made  staggering  blows,  blindly  and 
insanely  attempting  to  kill  the  goose  which  has  laid  most  of  our 
golden  eggs? 

The  first  patent  law  under  the  constitutional  provision  cited 
was  enacted  by  Congress  in  1790.  Up  to  1836,  tinctured  some- 
what by  the  old  theory  of  a  royal  prerogative  and  grant,  the  prac- 
tice was  for  an  inventor  to  petition  and  for  the  officers  of  the 
government  to  pay  attention  simply  to  the  form  of  the  grant. 
So  patents  were  then  issued. 

Although,  to  some  esthetic  minds  and  to  some  wild  theorist* 
and  to  some  associations,  it  is  obnoxious  to  say  that  the  hope  of 
reward  or  gain  (either  in  money  matters  or  in  the  manner  of 
living)  is  the  main  incentive  to  human  endeavor,  it  plainly  re- 
mains that  our  history  from  1790  to  1836  show?  that  perfunctory 
performances  under  the  constitutional  provision  which  I  have 
cited,  did  not  meet  its  purposes.  In  1836  the  patent  laws  were 


revised,  the  patent  office  was  organized,  a  corps  of  skilled  exam- 
iners as  to  what,  in  the  world,  was  really  new  and  useful  was  in- 
stalled, and  provisions  of  law  were  added  by  Congress,  which 
were  intended  to  give  to  real  inventors  real  monopolies. 

The  nations  of  the  earth  are  very  slowly  following  the  example 
set  by  us  in  1836.  England,  though  tardy,  was  the  first  to  fol- 
low our  example  in  organizing  a  corps  of  examiners  as  to  what 
was  new  and  useful  in  her  realm.  She  still  lacks  the  wisdom  to 
give  to  her  inventors  some  prima  facie  exclusive  property  rights. 

Germany,  with  great  severity  as  to  details,  is  now  traveling  on 
our  lines  as  to  inventions,  and  is  about,  in  this  regard,  where  we 
were  in  1870,  at  the  time  of  the  second  revision  of  our  patent 
laws. 

What  is  the  monopoly  which  an  inventor  obtains  under  our 
laws?  This  question  I  shall  answer  briefly. 

The  constitutional  provision  gives  him  an  exclusive  right  for 
a  limited  period.  Our  court  of  last  resort,  the  supreme  court 
of  the  United  States,  has  said  in  an  unbroken  line  of  unanimous 
decisions,  as  to  which  there  has  been  no  modification,  that,  under 
the  Constitution  and  under  the  acts  of  Congress,  letters  patent 
for  inventions  confer  upon  the  recipient  of  the  grant  three 
monopolies,  namely,  one  to  make,  another  to  use,  and  still  an- 
other to  sell.  The  recipient  of  the  grant,  that  is,  the  person  or 
persons  to  whom  the  patent  may  issue,  has,  under  the  plaiix 
meaning  of  our  laws,  the  right,  for  seventeen  years,  to  own,  retain, 
and  control  his  invention,  even  if  he  put  it  in  a  corner  closet 
behind  a  Yale  lock,  or  he  may  "farm  out"  the  same  upon  such 
conditions  and  terms,  as  to  the  proper  use  of  his  invention  in 
manufacturing,  as  to  the  character  of  the  output  produced,  in 
whole  or  in  part,  by  his  invention,  as  to  the  location  where  his 
invention  may  be  used,  and  as  to  the  prices  which  shall  be  charged 
for  that  which  involves  his  invention,  just  as  to  him  may  seem 
meet  and  profitable.  I  am  not  unmindful  of  recent  decisions  in 
federal  courts  of  inferior  jurisdiction,  which  seem  to  militate, 
upon  their  face,  against  the  broad  propositions  just  made.  It 
remains,  however,  in  my  opinion,  that  he  who,  in  this  country, 
has  made  an  invention  which  has  been  properly  patented,  may, 
for  seventeen  years,  either  retain  it  to  himself  or  "farm  it  out" 
upon  such  terms  and  conditions  as  to  making,  as  to  using,  and 
as  to  selling  as  he  may  elect,  so  long  as  his  election  shall  not  be 
contrary  to  some  great  and  general  public  purpose. 

Such  is  the  nature  of  the  grant,  such  is  the  constitutional  pro- 
vision upon  which  it  is  based,  and  I  feel  safe  in  saying  that,  for 
the  purpose  of  promoting  progress  in  science,  in  arts,  and  in  our 

sia 


civilization,  this  form  of  monopoly  will  remain  until  after  the 
provisions  of  our  national  Constitution  preserving  the  right  of 
trial  by  jury,  preventing  the  deprivation  of  property  except  "by 
due  process  of  law,"  and  prohibiting  enactments  by  State  legis- 
latures impairing  the  obligations  of  contracts,  shall  have  been 
worn  worse  than  threadbare. 

My  further  words  will  be  few,  and  they  will  relate  to  the  in- 
dustrial effects  of  our  patent  system. 

We  have  received  beautiful  theories  from  the  savants  of  other 
countries,  but  the  practical  inventions  have  been  made  in  this 
country,  and  with  this  result,  as  to  which  I  challenge  contradic- 
tion, that  in  ninety  per  cent  of  the  artificial  and  useful  products 
of  the  world,  the  Yankee  to-day  produces,  as  compared  with  all 
other  human  beings,  a  better  article,  at  a  less  cost  of  production, 
and  he  still  pays  the  highest  wages.  This  result,  nay,  this  fact, 
may  possibly  in  some  part  be  due  to  tariff  laws  or  to  monetary 
regulations,  but  I  do  not  believe  it,  and  I  do  believe  that  it  is  the 
sole  result  of  the  encouragement  of  our  patent  laws. 

It  should  also  now  be  specifically  remarked  that,  as  conceded 
by  all  competent  writers  and  economists,  the  principal  reason 
why  greater  wages  are  paid  in  the  United  States  than  anywhere 
in  the  world  is  the  fact  that,  by  virtue  of  the  encouragement  of 
our  patent  system,  minor  improvements,  relating  frequently  to 
the  smallest  details  of  processes,  methods,  and  machines,  have 
enabled  us  to  reduce  the  cost  of  production  and  to  improve  the 
character  of  the  article  produced  beyond  that  which  producers 
in  any  other  nation  have  yet  been  able  successfully  to  accomplish. 
And  I  pause  to  say  that,  in  view  of  this  plain  and  prominent  fact, 
any  disposition  to  discourage  the  patenting  of  what  are  some- 
times ironically  called  trifling  improvements,  and  a  disposition 
to  annul  patents  therefor,  if  the  improvement  be,  in  the  broadest 
sense  of  the  terms,  new  and  useful,  should  be  affirmatively  and 
earnestly  opposed  as  being  more  threatening  than  any  condition 
of  war  or  any  results  of  war  can  be. 

I  venture  the  statement  that  more  than  seventy  per  cent  of 
the  blades  in  the  pocket-knives  in  this  great  audience  were  made 
and  tempered  in  this  country,  shipped  abroad,  stamped,  encased 
in  handles  and  boxes,  and  reshipped  to  this  country.  I  forbear 
to  comment  upon  this  fact. 

Looking  backward  through  the  years  of  authentic  history, 
we  find  "the  quarry  slave  scourged,  at  night,  to  his  dungeon." 
"We  find  the  Oriental,  bound,  as  it  were  by  the  queue  of  his  hair  to 
the  pole  of  unintelligent  labor,  and,  in  modern  times,  we  find 
women,  both  in  the  domains  of  England  and  in  continental 

520 


THOMAS  UPDEGRAFF 
T.  S.  SMITH 
JOHN  M.  STAHL 


J.  C.  HANLEY 
AARON  JONES 
JOHN  HILL,  JR. 


Europe,  used  as  mere  beasts  of  burden,  not  only  about  the  mines, 
but  also  where  the  pig-iron  is  carried  to  the  furnace. 

In  our  colonial  days  our  grandmothers  walked  miles  per  day 
in  winding  a  thread  about  a  spindle  with  which  they  weaved  cloth 
to  clothe  their  children,  while  to-day  our  machines,  the  product 
of  Yankee  inventions,  register  in  a  few  minutes  a  thousand  miles 
of  our  grandmothers'  tired  walks. 

Illustrations  could  be  multiplied  by  ten  thousand  times  ten 
thousand.  We  do  not  for  a  waking  minute  of  our  lives  either 
dress  or  eat  or  work  or  play  without  using  some  product  of  an 
American  invention. 

What,  then,  has  brought  these  distinctive  conditions  to  pass 
in  our  country?  The  plain  answer  is  this : 

The  workman  in  our  country,  be  he  the  carrier  of  a  hod  which 
does  not  balance  on  his  shoulder,  or  a  bricklayer  whose  trowel 
is  not  handy,  or  the  steamfitter  who  in  his  daily  toil  recognizes 
the  relation  between  area  and  pressure — be  he  laborer,  artisan, 
mechanic,  or  engineer,  unless  he  be  a  recent  importation  or  a 
natural  loafer  or  one  who  is  under  the  thumb  of  some  irrespon- 
sible walking-delegate,  either  with  or  without  his  dinner  pail, 
goes  to  his  work  through  an  atmosphere  which  makes  him  think. 

The  burden  of  the  thought  of  the  American  laborer  is  as  to 
how,  possibly,  his  tools  or  his  machine  may  be  improved,  how 
manual  labor  may  be  lessened,  how  the  cost  of  production  may 
be  cheapened,  how  the  product  may  be  bettered — in  short,  how 
the  dignity  of  labor  may  be  increased  by  the  continuous  addition 
of  the  elements  of  intelligence,  thought,  experiment,  and  im- 
provement, with  resulting  benefits,  first,  to  himself  and  to  his 
family,  and,  secondly,  to  the  now  very  rapidly  increasing,  shift- 
ing, and  uncertain  cash  capital  held  by  the  bankers  and  by  the 
employers. 

That  the  encouragement  of  our  patent  laws  and  the  monop- 
olies thereunder  have  dignified  and  enriched  daily  toil  ten  thou- 
sand fold  is  way  beyond  any  intelligent  or  honest  disputation. 

In  conclusion,  I  ask  another  question,  and  cannot  forbear  to 
give  its  necessary  answer. 

What  has  brought  it  to  pass  that  the  workman,  the  artisan, 
the  mechanic,  or  the  engineer  in  our  country  begins  his  daily 
work  with  such  thoughts  and  with  such  ambitions? 

The  plain  answer  is,  the  encouragement  and  the  hope  of  re- 
ward, by  way  of  a  monopoly  for  a  limited  period  or  of  a  full  and 
speedy  compensation  for  parting  with  the  monopoly,  in  whole 
or  in  part,  which  the  patent  laws  of  the  United  States2  in  no 
equivocal  terms,  promise  to  its  people. 

521 


I  must  add  that  any  material  interferences  in  the  carrying 
out  of  these  promises,  whether  by  Congress,  by  the  courts,  or  by 
the  communes,  will  degrade  labor,  will  widen  the  breach  between 
capital  and  labor,  will  tend  to  destroy  our  mechanical  and  indus- 
trial supremacy,  will  tend  largely,  whatever  the  conditions  of 
peace  or  war  may  be,  to  reverse  the  balance  of  trade  between 
our  nation  and  other  nations,  and  will  work  havoc  in  all  of  our 
boasted  institutions. 


G.  W.  NORTHRUP,  JR. 

Member  Illinois  Bar. 

G.  W.  Northrup,  speaking  on  "Practical  Remedies  for  Indus- 
trial Trusts,"  said : 

It  is  well  worth  considering  whether  the  popular  belief  in 
the  futility  of  federal  legislation,  as  applied  to  industrial  trusts, 
and  the  declarations  to  that  effect  so  generally  made  by  promi- 
nent men,  are  well  founded.  At  least  it  is  important  to  inquire 
upon  what,  if  anything,  in  the  past  history  of  legislation  and 
judicial  decision  on  this  subject,  such  sweeping  opinions  are 
based.  It  would  seem  as"  though  such  conclusions  would  not 
have  found  general  acceptance  until  repeated  efforts  had  been 
made  by  the  federal  government  to  legislate  on  the  subject,  and 
until  all  such  legislation  had  proved  ineffective  on  account  of 
some  inherent  defect  in  the  powers  of  Congress.  But  such  is  far 
from  being  the  case. 

The  so-called  Sherman  anti-trust  act  of  July  2,  1890,  consti- 
tutes, practically,  the  only  federal  legislation  on  the  subject  of 
trusts,  monopolies  and  combinations  in  restraint  of  trade.  The 
act  makes  illegal  and  prohibits,  under  penalty  of  a  fine  not  ex- 
ceeding five  thousand  dollars,  or  imprisonment  not  exceeding  one 
year,  or  both,  "every  contract,  combination  in  the  form  of  trust 
or  otherwise,  or  conspiracy,  in  restraint  of  trade  or  commerce 
among  the  several  states  or  with  foreign  nations,"  and  every 
attempt  "to  monopolize  any  part  of  the  trade  or  commerce  among 
the  several  states  or  with  foreign  nations."  This  language  is 
calculated  to  create  the  impression,  in  the  mind  of  a  "layman," 
that  every  trust,  combination  and  monopoly  which,  in  the  course 
of  its  business  dealings,  engages  in  commerce  in  more  than  one 
state,  is  within  the  prohibitions  of  the  act.  But  further  con- 
sideration demonstrates  clearly  that  this  is  not  the  fact.  The 
phrases  "among  the  several  states"  and  "with  foreign  nations" 

522 


are  copied  from  the  commerce  clause  of  the  Constitution,  which 
declares  "the  Congress  shall  have  power  to  regulate  commerce 
with  foreign  nations  and  among  the  several  states."  Long  before 
the  passage  of  the  Sherman  act,  long  before  the  modern  trust  had 
made  its  appearance,  this  commerce  clause  had  been  the  subject 
of  repeated  judicial  consideration,  and  the  phrase  "commerce 
among  the  several  states,"  had  become  fixed  and  crystallized  as 
equivalent  to  "commerce  between  the  several  states" — those  acts, 
dealings  and  transactions  directly  involved  in  effectuating  the 
transfer  of  persons,  property  or  value  across  one  or  more  state 
lines;  in  short,  "interstate  commerce,"  as  distinguished  from 
"that  commerce  which  is  completely  internal,  which  is  carried  on 
between  man  and  man  in  a  state  or  between  different  parts 
of  the  same  state."*  It  is  manifest,  then,  that  the  only  con- 
spiracies or  combinations  within  the  purview  of  the  Sherman 
act,  are  conspiracies  and  combinations  to  restrain  or  monopolize 
either  interstate  commerce  per  se,  and  as  thus  defined,  or  foreign 
commerce,  or  both. 

Notwithstanding  these  obvious  considerations,  the  practical 
failure  of  the  Sherman  act  as  a. repressive  measure,  has  not 
been  generally  ascribed  to  its  own  inherent  limitations.  On  the 
contrary,  this  failure  has  been  charged  up  with  equal  vehemence 
to  the  indifference  or  hostility  of  the  executive  department  on  the 
one  hand,  and  on  the  other,  to  adverse  "judicial  legislation"  by 
the  federal  courts.  If  the  former  charge  be  well  founded,  the 
remedy  is  obvious.  We  are  satisfied,  however,  that  the  judicial 
decisions  which  have  been  rendered  involving  the  scope  and  ap- 
plication of  the  Act  of  1890,  are  not  justly  open  to  criticism.  On 
the  contrary,  we  assert  with  confidence,  that  an  examination  of 
these  decisions  is  calculated  to  inspire  a  renewed  respect  for  the 
federal  judiciary,  and  to  afford  substantial  encouragement  for 
the  future.  It  is  specially  significant  that  the  Supreme  Court 
itself,  as  late  as  1897,  denounced  in  sweeping  and  emphatic  lan- 
guage, the  modern  trusts,  as  "combinations  of  capital,  whose 
purpose  in  combining  is  to  control  the  production  or  manufacture 
of  any  particular  article  in  the  market,  and  by  such  control,  dic- 
tate the  price  at  which  the  article  shall  be  sold,  the  effect  being 
to  drive  out  of  business  all  the  small  dealers  in  the  commodity  and 
to  render  the  public  subject  to  the  decision  of  the  combination 
as  to  what  price  shall  be  paid  for  the  article."  Said  the  Court: 
"In  this  light  it  is  not  material  that  the  price  of  an  article  may 
be  lowered.  It  is  in  the  power  of  the  combination  to  raise  it, 
and  the  result  in  any  event  is  unfortunate  for  the  country,  by 

*Gibtx>ns  vs.  Ogden,  9  Wheat.  (U.  S.)  1. 

523 


depriving  it  of  the  services  of  a  large  number  of  small  but  inde- 
pendent dealers  who  were  familiar  with  the  business  and  who 
had  spent  their  lives  in  it,  and  who  supported  themselves  and 
their  families  from  the  small  profits  realized  therein.  Whether 
they  be  able  to  find  other  avenues  to  earn  their  livelihood  is  not 
so  material,  because  it  is  not  for  the  real  prosperity  of  any  coun- 
try that  such  changes  should  occur  which  result  in  transferring 
an  independent  business  man,  the  head  of  his  establishment, 
small  though  it  might  be,  into  a  mere  servant  or  agent  of  a  cor- 
poration for  selling  the  commodities  which  he  once  manufactured 
or  dealt  in,  having  no  voice  in  shaping  the  business  policy  of  the 
company  and  bound  to  obey  orders  issued  by  others.  Nor  is  it 
for  the  substantial  interests  of  the  country  that  any  one  com- 
modity should  be  within  the  sole  power  and  subject  to  the  sole 
will  of  one  powerful  combination  of  capital."* 

In  the  face  of  these  trenchant  declarations,  the  Court  can 
hardly  be  charged  with  extreme  partiality  to  trusts.  Moreover, 
whenever  a  contract  or  combination,  which  could  be  fairly  said 
to  lie  within  the  scope  of  the  Sherman  act,  has  come  before  the 
Supreme  Court,  the  latter,  disregarding  the  plausible  construc- 
tions and  ingenious  objections  of  eminent  counsel,  has  not  hesi- 
tated to  enforce  the  provisions  of  the  act  in  their  entirety.  In 
this  connection,  the  Court  has  declared  in  forcible  terms,  the 
power  of  Congress  to  legislate  in  its  own  discretion,  on  the  subject 
of  interstate  commerce,  and  the  duty  of  the  courts  to  enforce  this 
legislation,  in  accordance  with  the  will  of  the  legislative  body  as 
expressed  in,  the  terms  of  its  enactments. 

Most  important  of  all,  perhaps,  is  the  express  decision  in  the 
"Joint  Traffic"  case,  that  the  Sherman  act  violates  no  constitu- 
tional guaranties,  not  even  those  of  the  fifth  amendment,  which  de- 
clares that  no  person  shall  be  deprived  of  life,  liberty,  or  property, 
without  due  process  of  law,  and  that  private  property  shall  not 
be  taken  for  public  use  without  just  compensation.  "The  latter 
limitation/'  said  the  Court,  by  Mr.  Justice  Peckham,  "is,  we  think, 
plainly  irrelevant.  .  .  .  The  question  which  arises  here  is, 
whether  the  contract  is  a  proper  or  lawful  one,  and  we  have  not 
advanced  a  step  toward  its  solution  by  saying  that  the  citizen  is 
protected  by  the  fifth  or  any  other  amendment,  in  his  right  to 
make  proper  contracts  to  enable  him  to  carry  out  his  lawful  pur- 
poses. .  .  .  Notwithstanding  the  general  liberty  of  con- 
tract which  is  possessed  by  the  citizen  under  the  Constitution,  we 
find  that  there  are  many  kinds  of  contracts  which,  while  not  in 
themselves  immoral  or  mala  in  se,  may  yet  be  prohibited  by  the 

*United  States  vs.  Trans-Missouri,  etc.  Assn.,  166  U,  S.  290. 

524 


legislation  of  the  states,  or,  in  certain  cases,  by  Congress.  The 
question  comes  back  whether  the  statute  under  review  is  a  legiti- 
mate exercise  of  the  power  of  Congress  over  interstate  commerce 
and  a  valid  regulation  thereof.  The  question  is  for  us  one  of 
power  only,  and  not  of  policy.  We  think  the  power  exists  in 
Congress,  and  that  the  statute  is  therefore  valid."* 

So  far,  everything  seems  most  favorable,  but  the  concrete 
fact  remains  that  the  Supreme  Court,  while  steadily  refusing  to 
fritter  away  the  statute  by  forced  constructions,  has  also  with 
equal  steadfastness  declined  to  enlarge  its  prohibitions  beyond 
the  plain  limitations  expressed  in  the  wording  of  the  act  itself. 
The  Court  has  twice  decided  that  associations  formed  to  regulate 
freight  rates  for  interstate  traffic,  are  clearly  within  these  .pro- 
hibitions. But  it  was  held  in  the  E.  C.  Knight  Company  casef 
that  the  Sherman  act  did  not  apply  to  contracts  by  which  the 
American  Sugar  Refining  Company  had  secured  all  the  corporate 
stock  of  four  Pennsylvania  sugar  refining  companies,  which,  to- 
gether with  the  American  Company,  controlled  all  the  sugar  re- 
fineries of  the  United  States,  except  one,  and  manufactured  98 
per  cent  of  the  refined  sugar  produced  in  the  country,  although 
it  was  charged  by  the  government  that  by  means  of  these  con- 
tracts, the  defendants  had  secured  a  complete  monopoly  of  the 
manufacture  and  sale  of  refined  sugar  throughout  the  United 
States,  and  that  in  so  doing  they  had  combined  and  conspired  to 
restrain  trade  and  commerce  in  refined  sugar  among  the  several 
states  and  with  foreign  nations.  The  essential  point  decided  in  the 
case  was,  that  the  particular  contracts  under  examination  did  not 
constitute  a  direct  restraint  or  monopoly  of  interstate  commerce, 
but  merely  contracts  by  which  the  defendants  aimed  to  secure  a 
monopoly  of  the  manufacture  of  refined  sugar  in  Pennsylvania, 
and  that  the  effect  of  this  monopoly  in  manufacture  on  interstate 
commerce  was  indirect  and  incidental,  and  therefore  not  within 
the  purview  of  the  Sherman  act. 

This  decision,  and  others  which  have  followed  it,  are  prac- 
tically the  sole  authorities  relied  upon  in  support  of  the  proposi- 
tion that  the  federal  government  has  no  power  or  authority  to 
restrain  or  suppress  industrial  trusts.  It  is,  however,  perfectly 
clear  from  the  case  as  a  whole,  that  "the  Supreme  Court  did  not 
say  anything  to  that  effect,  but  on  the  contrary,  carefully  con- 
fined itself  to  the  particular  question  presented,  which  was  lim- 
ited and  defined  at  the  outset  of  the  opinion,  as  follows : 

"The  fundamental  question  is,  whether,  conceding  that  the 

*United  States  vs.  Joint  Traffic  Assn.,  171 U.  S.  571. 
fUnited  States  vs.  E.  C.  Knight  &  Co.,  156  U.  S.  1. 

525 


existence  of  a  monopoly  in  manufacture  is  established  by  the  evi- 
dence, that  monopoly  can  be  directly  suppressed  under  the  act 
of  Congress,  in  the  mode  attempted  b}>  this  bill." 

And  so  in  a  later  decision,  the  Court  said: 

"In  the  Knight  Company  case  it  was  said  that  this  statute 
(the  Sherman  act)  applied  to  monopolies  in  restraint  of  inter- 
state or  international  trade  or  commerce,  and  not  to  monopolies 
in  the  manufacture  even  of  a  necessary  of  life."* 

But  it  may  be  conceded  that  an  industrial  trust,  as  a  mere 
monopoly  in  manufacture,  and  without  violating  the  particular 
provisions  of  the  Sherman  act,  can  secure  practically  as-  com- 
plete a  monopoly  in  its  product  throughout  the  United  States, 
as  it  would  have  secured  had  it  combined  with  its  monopoly  in 
manufacture  and  local  sales  a  further  monopoly  of  interstate 
commerce,  per  se.  It  may  be  conceded  further,  that  it  is  not 
within  the  constitutional  powers  of  Congress  to  fine,  imprison 
or  enjoin  the  existence  of  monopolies  in  mere  manufacture  as 
monopolies,  because  manufacture  being  necessarily  a  local  mat- 
ter, a  monopoly  in  manufacture  is,  under  our  dual  system,  to  be 
prohibited  and  penalized  as  such  monopoly,  by  the  authorities 
of  the  state  of  its  habitat  only.  Conceding  all  this,  it  by  no  means 
follows  that  no  effective  remedies  for  evils  of  this  class  can  be 
afforded  by  federal  legislation. 

Although  the  federal  authorities  may  have  no  control  over 
industrial  trusts  as  monopolies  of  manufacture,  yet  as  soon  as 
these  manufactures  start  in  a  movement  destined  to  carry  them 
across  the  boundary  line  of  any  state,  they  become  the  subjects 
of  interstate  commerce,  and  come  within  the  jurisdiction  of 
Congress,  to  remain  within  its  jurisdiction  until  they  have  actu- 
ally passed  the  state  line,  and  become  intermingled  with  the  gen- 
eral mass  of  goods  in  the  state  of  their  destination.  Further,  not 
only  the  actual  transportation  of  such  manufactures  across  state 
lines,  but  all  transactions  and  agencies  directly  connected  with 
accomplishing  that  end,  are  within  the  plenary  power  and  con- 
trol of  Congress,  by  virtue  of  its  constitutional  power  to  regulate 
interstate  commerce. 

Power  to  regulate  interstate  commerce  involves,  in  its  very 
essence,  among  other  powers,  the  power  to  determine  and  pre- 
scribe what  agencies  shall  be  permitted  to  engage  in  interstate 
commerce.  Doubtless  under  the  constitution,  this  determination 
cannot  be  exercised  in  a  purely  arbitrary  manner,  or  be  the  result 
of  mere  whim.  But  where"  a  given  determination  can  fairly  be 
said  to  rest  on  an  intelligible  basis,  having  some  conceivable  rela- 

*United  States  vs.  Trans-Missouri  Freight  Assn.,  166  U.  S.  326. 

526 


tion  to  the  promotion  of  national  interests,  the  discretion  of  Con- 
gress in  making  that  determination,  in  the  exercise  of  the  powers 
granted  by  the  commerce  clause  of  the  constitution,  must,  under 
all  the  decisions,  he  treated  hy  the  courts  as  an  absolute  discre- 
tion. 

Starting  with  the  propositions  announced  by  the  Supreme 
Court  in  the  decisions  referred  to,  i.  e.,  that  these  modern  com- 
binations of  capital  are  injurious  to  the  real  prosperity  and  sub- 
stantial interests  of  the  nation;  that,  if  not  in  themselves  im- 
moral or  mala  in  se,  they  are  proper  subjects  of  adverse  and  hos- 
tile legislation  on  the  part  of  Congress  in  the  spheres  in  which 
it  can  constitutionally  legislate ;  that  as  subjects  of  such  legisla- 
tion, they  are,  owing  to  their  injurious  character,  not  within  the 
protection  of  the  Constitution ;  that  where  Congress  speaks  on  a 
subject  over  which  it  has  constitutional  power  to  legislate,  pub- 
lic policy  in  such  a  case,  is  what  the  statute  enacts.  Starting  with 
these  propositions,  it  is  perfectly  competent  for  Congress  to  en- 
act legislation  declaring  the  injurious  character  of  industrial 
trusts,  their  dangerous  effects  upon  the  country  at  large,  and  for 
that  reason,  imposing  restraint  or  prohibition  upon  their  enjoy- 
ment of  those  fields  of  commercial  action  which  are  within  the 
jurisdiction  of  the  general  government. 

If  it  be  constitutional  for  Congress  to  punish  a  monopoly  of 
interstate  commerce  by- fine  and  imprisonment,  under  the  powers 
granted  by  this  commerce  clause,  it  is  assuredly  constitutional  for 
Congress,  under  the  same  provisions,  to  prohibit  a  monopoly  in 
manufacture  from  employing  or  engaging  in  interstate  commerce 
to  further  and  effectuate  its  injurious  aims. 

Indeed,  the  conceded  fact  that  the  individual  states  are  de- 
prived of  power  to  interfere  with  interstate  commerce  on  the 
part  of  monopolies  in  other  states,  even  for  the  purpose  of  pro- 
tecting their  own  citizens  from  destructive  competition,  is  a 
sufficient  demonstration  that  this  power  is  possessed  by  Congress. 
Having  absolutely  no  jurisdiction  over  interstate  commerce,  a 
state  is  unable  to  prevent  the  industrial  trusts  domiciled  in  other 
states  from  shipping  their  products  into  its  own  territory,  nor 
has  it  any  poAver  to  enact  laws  which  have  the  effect  of  rendering 
unsalable,  in  its  own  territory,  manufactures  and  products  of 
other  states  which  are  harmless  in  themselves.  It  is  clear,  there- 
fore, that  the  individual  states  are  helpless  to  protect  their  own 
manufacturers  and  dealers  from  the  destructive  competition  of 
industrial  trusts  in  other  states;  that  this  kind  of  protection  can 
only  be  afforded  by  the  regulation  of  interstate  commerce  per  se. 
But  no  powers  of  sovereignty  are  lost  or  destroyed  by  our  dual  sys- 

527 


tern  of  government,  and  powers  which  are  clearly  not  possessed 
by  the  states,  must  necessarily  inhere  in  the  federal  authorities. 

In  addition  to  this  broad  jurisdiction  over  interstate  com- 
merce per  se,  Congress  is  expressly  vested  with  the  exclusive  man- 
agement and  control  of  one  of  the  most  important  instruments  of 
commerce — the  post-office.  It  is  well  settled  that  this  power 
embraces  the  regulation  of  the  entire  postal  system  of  the  coun- 
try, and  the  power  to  designate  what  shall  be  carried,  and  what 
shall  be  excluded,  from  the  mails.*  In  recognition  of  these  prin- 
ciples, the  Supreme  Court  has  uniformly  upheld  acts  of  Con- 
gress making  it  a  criminal  offense  to  deposit  in  the  mails  not  only 
obscene  matter,  and  letters  or  communications  connected  with 
the  formation  or  execution  of  schemes  to  defraud,  but  also  lot- 
tery 'literature"  of  all  kinds.  In  passing  on  the  constitutionality 
of  the  Lottery  Act,  the  Supreme  Court  said: 

''When  the  power  to  establish  post-offices  and  post-roads  was 
surrendered  to  the  Congress,  it  was  as  a  complete  power,  and  the 
grant  carried  with  it  the  right  to  exercise  all  the  powers  which 
made  that  power  effective.  It  is  not  necessary  that  Congress 
should  have  the  power  to  deal  with  crime  or  immorality  within 
the  states  in  order  to  maintain  that  it  possesses  the  power  to  for- 
bid the  use  of  the  mails  in  aid  of  the  perpetration  of  crime  or 
immorality. 

"The  argument  that  there  is  a  distinction  between  mala  pro- 
liibita  and  mala  in  se,  and  that  Congress  might  forbid  the  use 
of  the  mails  in  promotion  of  such  acts  as  are  universally  regarded 
as  mala  in  se,  including  all  such  crimes  as  murder,  arson,  bur- 
glary, etc.,  and  the  offense  of  circulating  obscene  books  and  pa- 
pers, but  cannot  do  so  in  respect  of  other  matters  which  it  might 
regard  as  criminal  or  immoral,  but  which  it  has  no  power  itself 
to  prohibit,  involves  a  concession  which  is  fatal  to  the  contention 
of  petitioners,  since  it  would  be  for  Congress  to  determine  what 
are  within  and  what  without  the  rule ;  but  we  think  there  is  no 
room  for  such  a  distinction  here,  and  that  it  must  be  left  to  Con- 
gress in  the  exercise  of  a  sound  discretion  to  determine  in  what 
manner  it  will  exercise  the  power  it  undoubtedly  possesses."! 

The  application  of  the  principles  here  announced,  to  the  sub- 
ject under  discussion,  is  obvious,  and  needs  no  argument. 

As  we  have  already  seen,  the  Federal  Supreme  Court  has  de- 
clared that  these  monopolies  are  necessarily  injurious  to  the  best 
interests  of  the  country,  and  inimical  to  its  prosperity.  Substan- 
tially every  court  in  the  Union  has  made  repeated  and  even  more 
emphatic  declarations  to  the  same  effect.  The  status  of  indus- 

*Exparte  Jackson,  96  U.  S.  7'J7.  t-f"  re  Rapier,  143  U.  S.  134. 

528 


trial  trusts  as  mala  proliibita  is  now  further  established  by  the 
criminal  statutes  of  more  than  a  score  of  states. 

In  view  of  the  foregoing  considerations,  it  is  confidently  as- 
serted that  Congress  is  clothed  with  power  to  deprive  trusts  and 
monopolies  of  all  kinds  and  descriptions,  not  only  of  the  right  to 
engage  in  interstate  commerce,  but  also  of  the  right  to  use  the 
United  States  mails  in  the  promotion  and  effectuation  of  their 
monopolistic  aims. 

The  practical  effect  of  measures  of  this  character  is  obvious. 
The  destructive  results  accomplished  by  analogous  legislation 
upon  the  lottery  evil,  is  a  matter  of  recent  history.  The  ability 
freely  to  import  raw  materials  and  supplies  from  other  states 
into  the  states  where  their  manufacturing  plants  are  located,  the 
ability  freely  to  transport  and  distribute  their  product  through- 
out the  Union,  is  vital  to  a  perpetuation  of  their  monopolistic 
powers,  and  as  a  necessary  consequence,  vital  to  the  very  existence 
of  industrial  trusts  as  business  enterprises. 

Free  use  of  the  mails  is  essential  to  the  successful  prosecution 
of  commercial  enterprises,  in  direct  proportion  to  the  magnitude 
and  territorial  extent  of  their  operations.  Deprived  of  the  use 
of  this  instrument  of  commerce,  industrial  trusts  would  practi- 
cally be  compelled  to  cease  their  operations. 

Prohibitory  legislation  of  this  kind  cannot,  in  the  long  run, 
be  successfully  evaded.  So  far  as  the  element  of  postal  exclu- 
sion is  concerned,  the  existing  postal  laws  and  regulations  furnish 
ample  precedents  for  the  practical  enforcement  of  prohibitive 
measures  of  that  character.  Exclusion  from  interstate  commerce 
can  be  accomplished  by  statutes  imposing  heavy  penalties  upon 
the  transportation  by  industrial  trusts  of  any  property  or  values 
from  one  state  to  another;  by  the  imposition  of  like  penalties 
upon  any  common  carrier  or  other  agency  which  may  take  any 
part  in  such  transportation;  by  the  forfeiture  of  all  property  or 
goods  in  transit;  by  injunctive  relief  and  by  other  methods. 

It  is  true,  such  measures  would  not  affect  the  right  of  indus- 
trial trusts  to  dispose  of  their  product  in  the  state  of  its  manu- 
facture, but  property  sold  to  dealers  acting  in  combination, 
or  under  arrangement  with,  or  in  the  interests  of  the  trusts, 
would  still  remain  within  the  prohibitions  of  such  legisla- 
tion, and  be  barred  from  transportation  to  other  states  so 
long  as  it  remained  in  such  hands  or  control.  So  like- 
wise, property  sold  by  any  exclusive  arrangement  to  a  single 
dealer,  or  to  two  or  more  dealers  acting  in  combination  with 
each  other,  would  continue  within  these  prohibitions.  The  single 
dealer,  when  vested  with  such  exclusive  rights  to  the  entire 

529 


product  of  an  industrial  trust,  would  constitute  a  monopoly  in 
itself.  Indeed,  such  an  arrangement  could  hardly  be  effectuated 
without  practically  creating  a  new  monopolistic  combination, 
composed  of  the  trust  and  the  dealer  having  such  exclusive  rights. 
Two  or  more  exclusive  dealers,  acting  in  combination  with  each 
other,  would  likewise  constitute  a  monopoly,  irrespective  of  any 
connection  with  the  trust  from  whom  they  obtained  their  prod- 
uct. In  short,  until  any  trust  or  combination  should  have  abso- 
lutely and  bona  fide  parted  with  all  the  interest  and  control  of 
its  product  to  independent  dealers  in  its  own  state,  that  product 
would  remain  within  the  prohibitions  of  such  legislation.  But 
when  manufactures  or  other  property  have  become  thus  dis- 
tributed among  a  ^number  of  independent  dealers  acting  inde- 
pendently, the  monopoly  in  that  product  is  ipso  facto  destroyed, 
and  it  comes  into  the  market  subject  to  the  laws  of  competition 
which  govern  the  product  of  the  ordinary  small  independent  pro- 
ducer. 

Legislation  of  this  character  is  consonant  with  the  spirit  of 
our  institutions.  Under  our  system  of  government,  the  several 
'states  are  left  to  deal  with  their  own  domestic,  social  and  business 
problems.  Every  state  has  ample  power  in  the  exercise  of  its  own 
sovereign  authority,  to  punish  and  exterminate  trusts  and  monop- 
olies in  its  own  borders.  The  practical  difficulty  with  the  present 
situation  consists  in  the  fact  that,  owing  to  their  inability  to 
interfere  with  interstate  commerce,  the  several  states  are  unable 
to  prevent  the  practical  invasion  of  their  own  territory  by  trusts 
domiciled  in  other  states.  It  is  idle  for  a  state  to  punish  and 
extirpate  its  own  domestic  monopolies,  so  long  as  its  manufactur- 
ers, dealers  and  consumers  remain  practically  subject  to  the  de- 
structive competition  of  foreign  monopolies.  Legislation  like 
that  suggested,  leaves  the  states  free  to  deal  with  the  trusts  in 
their  own  borders  as  they  see  fit.  If  any  state  prefers  trusts  and 
monopolies,  it  is  at  liberty  to  encourage  their  growth  within  its 
own  limits.  On  the  other  hand,  states  hostile  to  these  modern 
developments,  are  left  free-handed  to  deal  with  them  in  their 
own  territory  as  they  see  fit,  without  finding  their  efforts  ren- 
dered nugatory  by  the  aggressive  action  of  monopolies  in  other 
jurisdictions. 

DAVID  KINLEY. 

Prof.  David  Kinley,  of  the  University  of  Illinois,  presenter!  to 
the  convention  a  report  on  the  information  gathered  by  the  Civic 
Federation  concerning  trusts.  The  report  was  in  part  as  follows : 

Questions  were  sent  to  wholesale  dealers,  commercial  trav- 

530 


elers,  railroads,  combinations,  labor  organizations,  contractors 
and  manufacturers,  and  economists,  financiers,  public  men,  etc. 

According  to  these  replies  the  following  articles  "cannot  be 
bought  outside  of  trusts: 

Anthracite  coal,  bagging,  brass  goods,  cigarettes,  copper, 
(rolled),  coffee,  glass,  iron  and  steel,  (certain  iron  and  steel  prod- 
ucts, such  as  chains,  nails  and  shovels,  pipe,  etc.),  glucose,  kero- 
sene oil,  liquors,  (domestic  distilled  except  some  Kentucky  whis- 
ky), matches  (certain  makes),  raisins,  roofing  (felt  and  slate), 
powder  and  ammunition,  stoves,  sardines,  starch,  snuff,  solder, 
scythe  snaths,  tin  plate,  tinware,  tobacco  (certain  brands,  as 
Battle  Axe,  Horse  Shoe,  Duke's  Mixture,  and  Durham),  white 
lr:!<l.  white  pine,  lumber,  woodenware,  and  yeast  cakes. 

In  answer  to  the  question  what  effect  combinations  have  on 
the  distributor,  110  say  it  is  injurious  because  it  decreases  their 
business  and  profits  and  tends  to  eliminate  them. 

Forty-nine  wholesale  dealers  think  they  have  been  benefited 
by  the  formation  of  combinations. 

In  answer  to  the  question  what  effect  combinations  have  on 
the  consumer,  105  think  consumers  are  injured,  while  only  34 
think  they  are  benefited,  and  41  think  there  is  no  difference. 

The  items  of  information  about  prices  aggregate  506;  452 
were  to  the  effect  that  prices  rose  after  combinations  were  made ; 
24  that  they  fell,  15  that  there  was  no  change,  and  15  that  they 
were  fluctuating;  210  do  not  specifically  assign  a  cause,  189  assign 
trusts  as  the  cause  of  the  change  (increase,  in  most  of  these  cases) ; 
and  40  assign  other  causes,  usually  "increased  demand,"  "rise  of 
raw  materials/'  or  the  tariff. 

Of  the  452  answers  that  prices  rose,  294  were  from  wholesale 
dealers,  105  from  manufacturers  and  contractors,  and  53  from 
commercial  travelers. 

Circular  "H,"  sent  to  lawyers,  economists,  public  men,  etc., 
nominally  contained  eleven  questions.  The  first  question  asked, 
"Should  a  combination  of  producing  agencies  be  expected  to  in- 
crease or  decrease  the  cost  of  production;  if  either,  ought  it 
therefore  to  be  beneficial  to  society  or  the  reverse?" 

Four  hundred  and  thirty-two  of  the  writers  think  that  com- 
binations "should"  decrease  the  cost  of  production,  and  17  that 
they  "should"  increase  it.  Two  hundred  and  eighty-nine  think 
that  the  decrease  "ought"  to  be  beneficial  to  society,  and  74  that 
it  "ought"  to  be  a  detriment.  The  rest  do  not  answer. 

To  what  extent  will  the  consumer  gain  by  the  decrease  in  cost 
of  production?  Forty  of  the  444  answers  to  the  question  say  it 
will  depend  on  competition;  110  think  the  consumer  will  eventu- 
al 


ally  get  most  or  all  of  the  gain;  and  101  think  his  gain  will 
depend  on  the  trusts;  while  75  think  the  consumer  Avill  gain 
nothing  and  the  rest  are  doubtful. 

Is  there  any  danger  to  the  individual  investor  and  the  finan- 
cial system  of  the  country  from  large  aggregations  of  capital? 
Two  hundred  and  ninety-three  think  that  there  is  danger  for  the 
individual  investor,  because  of  his  inability  to  judge  of  the  safety 
of  the  investment,  or  because  of  the  widespread  evil  that  would 
result  if  a  crash  should  come.  Sixty-three  say  there  is  no  element 
of  danger  to  the  individual  investor.  In  the  opinion  of  266,  large 
capitalization  is  dangerous  to  our  financial  system,  and  is  not 
so  in  the  opinion  of  79. 

What  effect  have  combinations  on  wages  and  conditions  of 
labor? 

One  hundred  and  eighty  writers  say  that  combinations  in- 
crease wages,  and  148  that  they  reduce  wages;  51  that  they  de- 
crease the  number  employed,  3  say  that  they  increase  the  length 
of  the  working  day,  and  3  that  they  decrease  it,  25  that  they  have 
no  effect,  and  67  are  doubtful. 

As  to  the  effect  of  combinations  on  middlemen,  313  are  of  the 
opinion  that  these  will  be  wholly  or  partially  eliminated;  114 
think  that  this  will  be  to  the  advantage  of  society. 

The  tendency  to  combination  is  regarded  with  "apprehen- 
sion" by  270  on  the  ground  that  it  may  create  monopolies  con- 
trary to  the  public  weal,  while  149  think  there  is  no  danger,  and 
34  are  doubtful. 

Three  hundred  think  that  our  foreign  trade  would  be  bene- 
fited by  combination,  59  that  it  Mrould  be  injured,  64  are  doubt- 
ful, and  2  think  that  the  benefit  will  be  to  the  foreigner.  The 
nature  of  the  benefit  is  variously  described;  most  mean  thereby 
simply  an  increase  of  trade. 

Are  labor  organizations  trusts? 

Of  the  459  who  expressed  themselves  on  the  subject,  243 
think  that  labor  organizations  are  to  be  classified  with  other 
forms  of  combinations,  while  165  take  the  opposite  view,  and  53 
are  doubtful. 

Is  railway  consolidation  desirable? 

Two  hundred  and  twenty-eight  think  it  desirable,  and  41 
think  it  desirable  under  government  control  or  ownership;  70 
think  it  desirable  if  restricted  by  law,  11  desirable  except  in  the 
case  of  parallel  lines,  making  350  who  answered  in  favor  of  con- 
solidation with  or  without  restrictions.  Sixty-seven  think  rail- 
way consolidation  undesirable,  16  are  indifferent,  and  the  rest  are 
either  indefinite  in  their  statements  or  do  not  answer  at  all. 

532 


Considerable  information  was  received  about  prices,  from 
wholesale  dealers,  contractors  and  manufacturers  and  commer- 
cial travelers. 

AVli at  shall  be  done  with  combinations? 

In  answer  to  the  question  asking  for  suggestions  on  this  topic, 
a  large  number  of  opinions  were  brought  out,  and  are  tabulated 
as  follows: 


Answers  Indefinite 

Federal  Commission  to  Supervise 

Government  Ownership  or  Control  of 

Natural  Monopolies 5 

"Legislation,"  not  Otherwise  Specified      11 


Clergymen , 

Col.  Econoniists, 

Bu>i-  Pres'ts  Statisti- 

ness     and     Law-   cians,     Oth- 
Men.   Prof's,   yers.      etc.       ers.  Total. 
8        4        10        2          6        30 
32          48          3        20 


10 
12 


13 
9 


"Legislation,"'  Cong,  and  States 
"Let  alone" 
No  answer - 

Prevent  Over-Capitalization 14 

Publicity  of  Accounts 7 

Stricter     Limitation     of     Corporate 

Powers 

Tariff  Revision 20       1       13 

Taxation  ,.  G        2          3 


9 
16 


Miscellaneous 


25 
1 

20 
5 
9 

11 

7 
19 


26 
61 
11 
60 
45 
57 
49 

10 
45 
17 


98   57   119   55   102   431 
29   23   29   20   22   123 

127   80   148   75   124   554 


JOHN  AV.  SPENCER. 

In  presenting  my  ideas  upon  the  remedy  for  the  evil  effects 
of  organized  wealth,  I  take  it  for  granted  that  all  owners  of  wealth 
will  be  reasonable  enough  to  concede  that  the  remedy  is  only  to 
be  applied  to  the  evil  effect  of  wealth  that  is  concentrated  and 
organized  for  purposes  that  are  not  for  the  benefit  of  the  major 
portion  of  the  people. 

As  a  delegate  at  large  from  the  state  of  Indiana,  I  come  from 
the  First  Congressional  District,  which  has  within  it  the  county 
of  Posey,  my  birthplace,  where  they  produce  more  cereals,  good 
people,  soldiers,  and  wealth  from  the  soil,  than  any  agricultural 
county  in  the  United  States  of  like  area  and  population,  notwith- 
standing the  sneering  snobs  and  would-be  humorists,  whose 
thoughts  emanate  from  a  brain  apparently  nourished  by  bad  al- 
cohol and  raw  meat.  The  city  of  Evansville,  which  is  the  second 
city  in  our  state,  is  the  commercial  center  of  that  district,  and 

533 


produces  so  much  hardwood  lumber  that  it  is  known  as  the  larg- 
est market  for  that  product  on  this  continent.  That  district  pro- 
duces more  lumber,  bituminous  coal,  wheat  and  corn  than  any 
six  counties  of  the  same  area  in  the  United  States.  Hence,  I  do 
not  hesitate  to  say  that  I  come  from  a  people  who  produce  more 
than  their  share  of  this  country's  wealth,  when  compared  with 
the  amount  they  are  able  to  retain,  and  consume  their  full  share 
of  the  country's  products  of  organized  wealth;  therefore,  they 
as  a  class  are  more  affected,  and  consequently  more  interested 
in  the  results  of  the  organization  and  centralization  of  wealth 
than  those  who  are  east  of  the  Alleghanies,  who  gather  the  wealth 
of  the  nation,  a  portion  of  which  is  produced  by  the  people  of 
my  state. 

I  think  it  is  everywhere  a  conceded  proposition  that  wealth 
is  centralized  and  industrial  trusts  are  organized  for  the  sole  pur- 
pose of  making  money  for  those  who  invest  therein ;  if  this  is  con- 
ceded, then  the  prime  motive  prompting  such  organizations  is 
human  avarice  and  greed;  or,  put  it  another  way,  it  is  an  effort 
to  profit  the  few  at  the  expense  of  the  many,  in  total  disregard 
of  the  rights  of  the  many.  1  know  that  some  of  the  later  day 
magazine  writers  characterize  such  statements  as  a  "crusade 
against  prosperity/'  but  they  fail  to  state  the  prosperity  they 
refer  to  is  the  prosperity  of  but  the  few  holders  of  trust  certifi- 
cates, and  not  the  prosperity  of  the  great  mass  of  people  who  con- 
sume the  products  of  the  industrial  trusts  and  produce  the  wealth 
to  declare  the  dividends  on  first,  second,  common,  preferred,  fluid, 
solid,  and  all  other  classes  of  stock  issued  by  the  trust;  I  know 
it  is  said  that  by  concentration  of  business  interests  they  cheapen 
their  product  to  the  consumer  and  enhance  the  price  of  labor  that 
produces  them,  but  is  that  true?  We  are  constantly  referred  to 
the  Standard  Oil  trust,  and  the  Sugar  trust,  as  examples.  Now, 
while  the  crude  oil  has  decreased  in  price  since  the  organization 
of  this  infant  industry,  the  price  of  the  refined  oil,  such  as  is 
consumed  by  the  people,  has  been  very  successfully  maintained. 
We  find  that  from  1894  until  1897,  crude  oil  declined  6  per 
cent,  while  refined  oil  advanced  14  per  cent;  notwithstanding 
the  fact  that  since  the  organization  of  the  Standard  Oil  trust 
thore  has  been  developed  and  put  into  use  as  against  its  product, 
that  greatest  of  all  of  nature's  product,  so  great  that  it  has  been 
called,  and  perhaps  correctly  so,  the  law  of  gravitation,  electricity, 
to  say  nothing  of  the  development  of  natural  gas,  and  the  fact 
that  demand  for  light  has  so  whetted  the  inventive  genius,  that 
artificial  gas  from  bituminous  coal  is  now  produced  at  a  cost  of 
about  16  cents  per  1,000  cubic  feet,  and  the  people  have  learned 

534 


to  make  a  "pillar  of  fire  by  night"  from  the  two4hirds  forma- 
tive substance  of  the  earth,  water;  and  so  with  the  Havemeyer 
associates  and  sugar — they  seem  to  think  that  some  of  us  do  not 
know  that  they  are  the  refiners  of  sugar,  and  that  the  prices  paid 
for  refined  sugar  has  never  been  so  cheap  as  they  were  in  1885, 
and  the  Sugar  trust  was  first  organized  in  November,  1887,  since 
which  time  the  price  of  sugar  has  been  steadily  maintained,  while 
the  price  of  raw  sugar  has  materially  and  steadily  decreased;  so 
on  analyzing  all  of  them,  we  find  that  their  every  effort  has  been 
to  strike  down  and  kill  all  competition,  so  as  to  gratify  their  ap- 
parent insatiable  avarice,  so  that  they  really  reap  unearned  profits 
and  injure  the  public ;  that  the  so-called  "economic  evolution  of 
our  industries"  injures  the  public,  will  be  readily  seen  from  a  few 
extracts  taken  from  the  testimony  of  Mr.  Havemeyer,  given  be- 
fore the  Senate  investigating  committee  in  1894. 

"The  Sugar  trust  makes  it  a  rule  to  make  political  contribu- 
tions to  the  Republican  party  in  Republican  states,  and  to  the 
Democratic  party  in  Democratic  states." 

"We  get  a  good  deal  of  protection  from  our  contribution." 

"Our  company  has  made  considerable  money  out  of  the  Mc- 
Kinley  bill." — (Byron  "W.  Holt  in  June  Review  of  Reviews.} 

Such  statements  as  these  drive  one  to  the  irresistible  conclu- 
sion that  the  sugar  trust  is  an  injury  to  the  public.  That  they 
reduce  the  number  of  positions  for  active  and  energetic  citizens 
to  fill,  is  no  longer  in  dispute,  since  reports  from  all  commercial 
travelers'  associations  testify  to  that  fact;  that  they  control  the 
output  of  articles  which  tfney  produce  and  handle  is  a  conceded 
fact,  that  they  control  the  price  of  raw  material,  assisted  by 
"protection  for  protection's  sake"  legislation,  is  no  longer  dis- 
puted; that  they  fix  and  resrulnte  the  prices  paid  by  wholesaler, 
jobber,  retailer,  and  finally  by  the  consumer  is  an  agreed  proposi- 
tion. 

It  strikes  me  that  a  few  master  minds  have  successfully  man- 
aged politics  and  business  from  a  financial  standpoint,  until  now 
the  industrial  trusts  propose  to  make  the  people  pay  tribute  to 
them  for  all  the  necessities  of  life,  from  the  soothing  syrup  age 
to  the  shroud. 

The  manufacturing  interests  have  told  and  repeated  to  us/ 
that  they  wanted  protection  to  erive  them  a  home  market;  they 
got  it  and  the  market,  and  now  thev  are  committing  the  old  com- 
mon law  crimes  of  forestalling  and  re.erratiner,  until  they  control 
that  home  market  from  the  raw  material  to  the  consumed  article. 

TTp  to  the  day  of  the  application  of  the  protective  tariff  by 


535 


the  industrial  trusts,  we  had  a  fair  competitive  system  of  produc- 
tion and  distribution.  If  it  is  possible,  let  us  take  up  again  the 
interstate  commercial  policy,  that  materially  assisted  us  in  devel- 
oping the  greatest  union  of  states  that  is  known  to  the  history 
of  man. 

My  method  of  regulating  and  restraining  the  substance  eating 
and  never  earning  trusts  would  be  to  first  have  the  Congress  of 
the  United  States,  as  soon  as  possible,  put  upon  the  free  list  every 
article  that  is  made,  sold  or  controlled  by  a  trust,  and  every  one 
of  the  _ component  parts  of  all  articles  manufactured  by  them. 
The  answer  to  that  would  be  or  is,  their  magnitude  is  such  that 
they  break  over  any  or  all  nations'  barriers,  and  become  interna- 
tional ;  but  "sufficient  for  the  day  is  the  evil  thereof,"  by  the  elim- 
ination of  the  protective  tariff,  AVC  would  not  necessarily  destroy 
or  disintegrate  them,  but  it  would  in  a  great  measure  relieve  the 
people  from  paying  the  enhanced  prices  to  them  for  such  neces- 
sities of  life  as  coal,  salt,  petroleum  and  its  products,  sugar, 
matches  and  the  like;  and  then  let  the  American  Congress  pass 
licensing  or  taxing  act,  in  the  exercise  of  the  police  power  of  the 
government,  under  the  implied  general  welfare  clause  of  the  Con- 
stitution, as  interpreted  by  Justice  Marshall,  the  definer  and  de- 
fender of  the  Constitution,  notwithstanding  the  opinion  of  Attor- 
ney-General Griggs  to  the  contrary. 

Are  the  people  to  be  informed  that  it  does  not  lie  within  the 
power  of  the  general  government  to  protect  the  government  itself 
from  the  avarice  and  greed  of  some  of  the  members  of  society? 
If  such  is  the  only  power  of  the  government,  what  is  there  to  pro- 
hibit a"  combination  of  capital  or  wealth  from  buying  up  all  the 
world's  output  of  coal,  or  salt  or  any  other  necessity,  and  they 
saying  to  the  other  members  of  society,  you  cannot  have  a  pound 
of  either,  unless  you  pay  our  price? 

Ah!  Greater  than  Griggs  have  been  in  error.  The  people  will 
stand  by  the  declarations  of  John  Marshall  in  preference  to 
Griggsology.  Place  upon  all  corporations  a  graduated  tax,  the 
rate  of  taxation  increasing  with  the  capitalization.  You  tell  me 
it  cannot  be  done  under  the  Constitution.  I  tell  you  that  at  one 
time  in  the  interest  of  organized  wealth,  the  national  banks,  this 
government  placed  a  tax  upon  their  competitors,  the  issue  of  the 
state  banks,  that  drove  them  from  the  fields  of  finance.  Why 
can  not  that  same  power  be  exercised  in  the  interest  of  the  peo- 
ple and  against  aggregated  wealth?  Here  is  a  way  that  I  believe 
is  safe  and  sure.  One  of  the  great  political  parties  that  is  now 
in  complete  control  of  all  branches  of  the  national  government, 

536 


will  next  year  in  its  declaration  of  principles,  declare  its  opposi- 
tion to  trusts,  we  are  told  by  leaders  of  that  party.  We  say,  "act 
your  opposition  before  you  declare;  you  have  the  opportunity, 
give  the  people  some  performance  and  not  so  much  in  promise, 
for  by  'their  fruits  ye  shall  know  them.' '' 


HENRY  H.  SWAIN. 

Montana  State  Normal  School. 

There  is  no  thought  of  entering  in  this  paper  into  a  compre- 
hensive survey  of  the  trust  problem.  Nor  is  there  any  attempt 
to  seek  some  one  simple  cause  for  the  growth  of  trusts.  The  rise 
of  trusts  has  resulted  from  a  combination  of  various  influences, 
and  no  one  cause  alone  is  sufficient  to  account  for  all  these  phe- 
nomena. We  have  heard  how  an  unwisely  adjusted  tariff  has 
fostered  the  growth  of  some  trusts,  how  others  have  profited  un- 
duly by  the  operation  of  patent  laws,  others  have  thriven  because 
of  unfair  discriminations  in  railroad  rates.  No  one  of  these 
causes  tells  the  whole  story,  but  all  are  important,  and  if  the 
trust  question  is  to  receive  any  truly  scientific  treatment,  all 
these,  as  well  as  many  other  phases,  must  be  fully  taken  into 
account. 

The  case  is  very  similar  when  we  come  to  the  relation  between 
trusts  and  the  currency.  There  is  no  disposition  to  claim  that 
our  currency  system  is  the  sole  cause  of  the  rise  of  trusts,  nor  that 
currency  reform  would,  all  by  itself,  settle  the  matter.  It  is 
maintained,  however,  that  the  relation  between  the  trusts  and  the 
currency  is  so  intimate  that  no.  consideration  of  the  trust. problem 
which  overlooks  this  view  of  the  matter  can  be  other  than  partial 
and  inadequate. 

If  we  should  ask  any  plain,  intelligent  business  man  what  is 
the  one  matter  of  vital  importance  under  our  profit  system  of 
doing  business,  he  would  certainly  reply  that  it  was  mainly  a 
question  of  prices.  It  is  utterly  impossible  for  any  enterprise  to 
keep  on  if  the  prices  obtainable  on  the  market  fall  for  any  reason 
whatever  below  the  cost  of  production.  If  the  fall  of  prices 
comes  about  from  causes  wholly  outside  the  business  itself,  the 
result  is  quite  as  disastrous  as  if  it  came  from  internal  causes. 

During  the  last  quarter-century  or  so,  while  we  have  been 
trying  the  experiment  of  gold  monometallism,  the  Usual  course 
of  general  prices  has,  as  a  result  of  that  experiment,  with  occa- 
sional temporary  fluctuations,  tended  steadily  downward.  There 
was  once  a  time  when  certain  persons  professed  to  be  unconvinced 

537 


of  this  fact.  I  think  that  time  is  past.  I  have  in  recent  months 
read  efforts  to  show  that  this  fall  was  not  without  its  partial  com- 
pensations, but  I  think  the  fact  of  the  fall  is  itself  no  longer  seri- 
ously disputed. 

Now  what  is  the  bearing  of  this  upon  the  trust  question?  It 
touches  it  at  two  points.  In  the  first  place,  the  fall  of  prices 
resulting  from  an  unstable  currency  has  tended  to  magnify  every 
disadvantage  against  which  a  weaker  competitor  was  struggling. 
Does  one  enterprise  sustain  itself  with  difficulty  because  of  unfair 
discrimination  in  railroad  rates — then  the  possibility  of  success 
is  still  further  diminished  by  the  burden  of  falling  prices.  Is  one 
competitor  heavily  handicapped  because  of  a  rival's  possession  of 
exclusive  patents — then  the  additional  weight  of  constantly  fall- 
ing prices  breaks  down  the  competitor  altogether. 

In  a  superficial  view  of  the  case  it  might  seem  that  such  a  con- 
dition would  affect  all  competitors  alike,  and  so  not  prejudice  the 
race  at  all.  But  while  the  effect  upon  all  is  similar  in  kind,  the 
weight  upon  each  is  not  necessarily  in  equal  proportion.  Under 
normal  conditions  a  small  advantage  in  draft  of  river  vessels  is 
only  of  slight  importance,  but  in  a  stage  of  low  water  the  impor- 
tance of  this  advantage  is  greatly  enhanced  and  a  very  slight  dif- 
ference of  draft  may  make  all  the  difference  between  complete 
success  and  hopeless  failure.  So,  under  stable  prices,  many  com- 
petitors may  remain  in  the  field  even  in  spite  of  unfair  discrimina- 
tion. But  when  prices  continue  downward  for  a  long  period, 
there  is  less  hope  for  all  competitors,  and  the  enjoyment  of  some 
exceptional  favoritism  may  prove  the  absolute  sine  qua  non  of 
survival. 

An  appreciating  currency  accelerates  the  development  of  trust 
combinations  in  the  second  place,  because  it  greatly  increases  the 
stimulus  to  strive  for  a  complete  mastery  of  the  market.  Under 
these  circumstances  even  the  possession  of  unfair  advantages  may 
not  suffice  unless  these  advantages  are  such  as  to  create  a  prac- 
tical monopoly.  Now,  if  an  industry  can  be  so  monopolized  that, 
while  general  prices  are  falling,  the  products  of  this  industry  can 
be  made  actually  to  increase  in  price,  or  even  to  fall  less  rapidly 
than  the  average  of  general  prices,  it  may  be  possible  not  only  to 
escape  from  the  mire  of  general  business  depression,  but  even 
to  attain  exceptional  prosperity.  All  depends,  however,  on  secur- 
ing practical  control  of  the  market.  Hence  all  energies  which, 
under  normal  conditions,  might  be  given  to  improving  the  prod- 
uct and  cheapening  the  process  are  now  bent  to  combine  the 
strongest  competitors  and  crush  out  all  others  by  whatever  means 
may  appear  necessary. 

688 


Thus  all  causes  tending  to  the  growth  of  monopoly  combina- 
tions have  been  stimulated  by  an  appreciating  currency.  Now 
let  us  note  what  occurs  when  this  unstable  currency  takes  a  turn 
in  the  opposite  direction.  In  the  last  few  years  gold-mining  has 
increased  so  rapidly  that  the  production  of  gold  in  1898  exceeds 
in  value  the  production  of  both  gold  and  silver  for  any  year  prior 
to  1891.  This  increase  in  gold  production  which,  under  an 
established  system  of  general  bimetallism.,  would  scarcely  have 
disturbed  the  general  price  level  at  all,  now  occasions  a  decided 
rise  of  general  prices,  giving  a  bonus  at  the  expense  of  the  public 
to  producers  generally.  In  so  far  as  industry  is  controlled  by  a 
trust  combination,  this  combination  of  course  also  gathers  its 
bonus  from  this  source.  AVhile  therefore  the  long-continued 
appreciation  of  the  currency  has  been  of  material  benefit  to  the 
trust  combination  in  its  efforts  to  crush  competitors,  the  com- 
binations which  have  survived  and  have  freed  themselves  from 
effective  competition,  now  find  an  unstable  currency  beginning 
to  depreciate  just  in  season  to  enable  them  to  reap  an  extra  profit 
at  a  time  when  they  are  prepared  to  monopolize  it. 

Hence,  while  a  currency  which  will  keep  prices  always  .at  an 
absolutely  unvarying  level,  is  something  not  yet  discovered,  still 
if.  can  be  seen  that  any  plan  for  dealing  with  the  trust  problem 
must  Toe  at  best  but  partial  and  inadequate  if  it  does  not  con- 
template as  one  of  its 'features  such  changes  in  our  currency  sys- 
tem as  will  tend  as  much  as  possible  toward  stability  of  prices. 
Still  worse  would  it  be  if,  by  the  retirement  of  our  national  paper 
currency  and  the  substitution  therefor  of  currency  of  private  issue, 
the  power  should  be  given  to  any  private  combination  not  only  to 
control  the  prices  of  its  own  specific  products,  but  even  to  man- 
ipulate the  general  price  level  in  behalf  of  special  class  interests. 


T.  B.  WALKER. 

Minneapolis  Board  of  Trade. 

J.  W.  Gaines,  of  Tennessee,  was  called  to  the  chair,  and  intro- 
duced T.  B.  Walker,  of  Minnesota,  who  spoke  on  "Trusts  from 
a  Business  Man's  Standpoint": 

To  intelligently  consider  the  question  of  the  modern  trusts 
it  is  necessary  first  to  examine  and  analyze  the  principles  and 
practices  on  which  the  trust  is  based.  Not  a  prolonged  discus- 
sion of  the  meanings  of  words,  but  to  know  what  the  object,  aim 

539 


and  intent  is  in  forming  these  combinations  and  to  trace  the 
practical  results  reached  by  them. 

The  general  foundation  principles  of  the  trust  and  that  which 
if  taken  away  would  entirely  obliterate  all  the  trust  methods,  is 
the  intention  to  combine  together,  under  one  central  control  so 
much  or  so  large  proportion  of  any  industry  that  the  production 
of  that  particular  commodity  can  be  so  limited  that  prices  can  be 
fixed  arbitrarily  and  maintained  at  any  price  within  certain  limits 
which  the  trust  may  determine  to  fix. 

If  this  result  could  not  be  reached  in  the  expectations  of  the 
formers  and  investors  in  the  trust,  there  would  be  none  organ- 
ized. This  is  the  essential  object  in  forming  the  combination. 
The  question  of  the  intention  is  evident  from  the  fact  that  peo- 
ple will  invest  their  money  in  these  trusts  under  an  excessive 
capitalization,  where  it  is  known  undoubtedly  and  unquestionably 
that  without  the  advantage  of  fixing  and  maintaining  high  prices 
dividends  could  not  possibly  be  earned  or  paid  on  such  an  enor- 
mous amount  of  capital  stock. 

For  instance,  the  tin-plate  trust  was  organized  from  plants 
which  with  their  good  will  under  legitimate  valuation  would 
probably  not  exceed  ten  million  dollars,  or  twelve  million  dollars 
at  the  outside,  was  organized  for  fifty  million  dollars.  Twenty 
million  dollars  of  preferred  stock,  drawing  a  good  rate  of  interest, 
and  twenty  million  dollars  of  common  stock  were  paid  for  the 
plants.  Ten  million  dollars  of  common  stock  was  distributed  to 
the  promoters  and  others  who  were  influential  in  forming  the 
combination.  Before  the  company  was  formed,  tin-plate  was 
worth  $2.75  per  box.  It  is  now  worth  $4.25.  Earnings  of  fif- 
teen to  twenty  per  cent  are  estimated  as  being  made  on  this  fifty 
million  dollars  of  capital  stock. 

As  another  instance,  it  has  been  proposed  to  me  several  times 
to  organize  a  lumber  and  timber  trust.  A  trust  that  is  formed 
and  can  handle  and  control  the  supply  of  raw  material  has  a  bet- 
ter chance  for  permanency  than  one  where  the  supply  of  raw 
material  can  be  produced  by  competing  producers  to  an  unlimited 
extent.  It  was  urged  upon  me  that  the  pine  timber  of  Minne- 
sota and  northwestern  Wisconsin  might  be  put  into  a  deal  where 
the  lumber  prices  would  be  controlled  to  such  an  extent  that  the 
trust  could  afford  to  pay  the  timber  owners  a  large  price  for  their 
timber,  mills  and  lumber  stock,  and  very  readily  add  enough  to 
the  lumber  price  to  cover  the  excessive  purchase  price  and  to 
make  dividends  on  the  enormous  amount  of  stock  that  would  be 
issued.  It  was  the  general  proposition  to  pay  us  a  large  sum  of 

540 


money,  if  wanted,  and  a  large  block  of  stock,  and  it  was  intimated 
that  a  portion  of  the  promoters'  portion  would  also  be  paid  over. 

The  only  object  whatever  in  proposing  to  form  this  trust  was 
to  put  so  much  of  the  timber  together  that  the  prices  could  be 
controlled  and  maintained  at  a  high  price.  If  it  had  been  shown 
to  these  promoters  and  investors  that  prices  could  not  have  been 
controlled  by  means  of  the  control  of  the  supply  and  the  limita- 
tion of  the  output,  it  would  not  have  been  considered  for  a 
moment  at  even  much  lower  figures  than  they  were  willing  to  pay. 
In  order  to  provide  against  competition  the  trust,  when  organized, 
makes  it  a  practice  to  pay  to  those  from  whom  the  plants  were 
purchased,  as  large  an  amount  of  stock  as  they  can  be  induced  to 
take  as  payments,  in  order  that  their  interests  may  induce  them 
not  to  build  competing  plants.  They  also  give  employment  to 
as  many  of  them  in  the  new  deal  as  they  can  conveniently  man- 
age, in  large  part  for  the  same  purpose,  namely,  to  prevent  com- 
petition. 

Another  method  of  destroying  competition,  which  is  prac- 
ticed by  some  of  the  large  trusts,  for  instance,  the  Diamond 
Match  Company,  the  National  Biscuit  Company,  and  the  Sugar 
Company,  is  to  give  to  the  wholesale  dealers  a  certain  discount  to 
each  one  that  will  buy  exclusively  of  the  trust  and  in  no  instance 
to  any  extent  from  any  competitor. 

The  Sugar  Company,  for  example,  pays  one-eighth  of  one 
cent,  and  all  of  the  wholesale  grocers  in  Chicago  are  in  the  deal, 
with  one  exception.  This  places  the  competitors  where  they 
cannot  sell  goods  to  these  firms  even  though  they  would  dis- 
count a  much  larger  amount  than  that  offered  by  the  trust,  as  the 
agreement  prohibits  any  such  purchases.  As  this,  then,  drives 
the  competition  to  seek  trade  among  the  retail  dealers,  the  trust 
follows  up  and  offers  to  sell  to  the  retailers  at  a  competitive  price. 

Perhaps  the  friends  of  the  trust  will  say  that  this  is  competi- 
tion for  the  benefit  of  trade.  On  the  contrary  it  is  the  throttling 
of  trade  to  prevent  or  destroy  competition.  The  competitors  are 
not  able  to  sell  goods  at  even  less  prices  for  a  better  quality,  for 
these  trusts  control  so  large  a  proportion  of  the  output  that  the 
wholesale  dealers  are  not  able,  or  feel  that  they  are  not  able,  to 
maintain  their  trade  without  accepting  these  demands.  The 
trust  is,  then,  in  a  position  to  control  the  market  without  recourse 
on  the  part  of  the  public. 

Competition  cannot,  then,  be  looked  for  excepting  there 
should  come  into  the  field  a  powerful  organization  of  experienced 
competitors  with  modern  methods  and  machinery  and  sufficient 
capital  to  meet  the  trust  in  the  contest  for  trade.  The  measures 

541 


taken  by  the  trust  to  prevent  such  results  and  the  prospect  of  a 
final  collapse  of  trusts  and  all  other  business  interests  with  them, 
are  likely  to  make  the  public  a  heavy  bill  of  expense  before  relief 
is  reached. 

We  are  told  that  a  trust  is  a  corporation.  That  corporations 
and  large  aggregations  of  capital  have  been  the  essential  means 
through  which  our  industrial  progress  and  great  advance  in 
wealth  and  prosperity  has  been  made.  Those  who  understand  the 
business  world  are  readily  agreed  on  these  general  facts.  The 
organizations  of  capital  under  the  laws  of  the  different  states  has 
enabled  small  capitalists  to  perform  the  work  that  could  be  per- 
formed only  with  large  capital,  but  it  is  begging  the  question 
when  we  are  urged  not  to  oppose  corporations  and  aggregations 
of  capital  because  such  organizations  have  been  of  great  value  in 
the  past.  An  invading  army  might  be  a  combination  and  we 
could  say  that  combinations  are  beneficial  and  hence  we  should 
not  defend  ourselves  against  the  invasion.  Trust  methods  were 
applied  in  other  ways  until  the  laws  of  the  states  trying  to  pre- 
vent these  combinations  drove  them  in  defiance  of  public  senti- 
ment to  seek  protection  under  laws  intended  only  for  the  organ- 
izations of  legitimate  business  corporations. 

The  ordinary  corporation  in  the  industrial  world  is  to  bring 
new  capital,  new  plants  and  new  competition.  It  is  for  the  inter- 
est of  the  commonwealth  and  the  general  prosperity. 

The  trust,  however  organized,  is  essentially  a  combination  for 
throttling,  and  in  many  cases  the  destruction  of  plants  that  other- 
wise would  be  competing  one  with  the  other  and  furnishing  goods 
at  a  relative  price  proportioned  to  the  amounts  received  by  other? 
for  their  work  or  the  use  of  their  capital. 

An  eloquent  appeal  made  by  Mr.  Cockran  in  favor  of  corpo- 
rations in  general  and  the  vast  advantage  received  from  the  use 
of  capital  and  the  necessity  for  peace  and  good  will  between  capi- 
tal and  labor  in  our  industrial  affairs,  while  very  fine,  and  to 
which  all  could  agree,  is  not  only  unfair  as  an  argument  in  favor 
of  the  trust,  but  when  rightly  applied  will  justify  the  most  ex- 
treme measures  to  wipe  out  and  prevent  the  organization  and 
operation  of  tmsts  in  this  country.  Mr.  Cockran  also  appealed 
strongly  for  the  protection  and  maintenance  of  competition  and 
excellence.  Now  what  excellence  there  is  in  the  combination  to 
defeat  competition  and  what  competition  there  is  in  the  excel- 
lence of  the  trust  methods  and  practices  seems  very  ludicrous  to 
consider.  There  has  not  been  one  single  excuse  or  argument 
presented  in  favor  of  the  trust.  It  is  a  method  so  opposed  to 
fairness  and  equal  individual  rights  that  the  most  stringent  laws 

542 


and  rigid  enforcements  are  justifiable  and  necessary  to  protect 
the  plain,  unquestioned  rights  of  the  community  at  large.  The 
fact  that  many  who  are  hostile  to  all  combinations  of  capital  and 
to  the  use  of  large  aggregations  of  capital,  are  arrayed  against  the 
trust.,  is  used  to  show  that  the  opposition  to  these  combinations  is 
essentially  from  this  class  of  people. 

This  is  not  true.  There  is  a  very  strong  undercurrent  and  in 
many  cases  unexpressed  hostility  to  this  form  of  business  over- 
reaching, and  many  who  have  even  taken  part  in  these  combina- 
tions where  they  have  thought  that  they  could  not  avoid  it  with- 
out heavy  loss,  are  strongly  opposed  to  such  combinations. 

Mr.  Cockran  recommends  as  a  method  of  regulation  and  to 
provide  against  the  encroachments  of  the  trust  upon  the  public 
interests  and  to  expose  their  unfair  methods,  that  full  and  specific 
annual  reports  should  be  required  from  them  and  these  subject 
to  public  inspection  and  publication.  This  he  dwells  upon 
largely  as  a  specific  remedy  for  the  evils  which  he  by  inference 
admits  are  the  result  of  the  trust  combinations. 

This  is  a  very  plausible  theory,  an  excuse'  and  a  make-shift 
which  would  be  practically  worthless  as  a  remedy  against  the 
evils  of  these  combinations.  Most  of  the  large  corporations  do 
make  annual  reports  which  the  public  is  not  sufficiently  inter- 
ested in  to  consider  more  than  as  to  the  summary  of  the  year's 
receipts  and  expenditures. 

To  trace  with  any  degree  of  certainty  the  unfair  methods  of 
the  trust  it  would  be  necessary  to  examine  in  detail  all  the  ac- 
counts and  all  items  of  expenditures.  To  authorize  the  examin- 
ers to  demand  explanations  and  to  investigate  under  oath  the 
officers  of  the  company  to  find  out  the  actual  considerations  for 
moneys  expended,  for  rebates  made,  and  the  object  and  motive  of 
many  proceedings  and  work  of  employees.  This  would  require  a 
perfect  army  of  -auditors  and  an  inquisitorial  intermeddling  with 
the  business  management  that  could  be  justified  only  by  a 
knowledge  of  the  wrong  motives,  intent  and  practice  of  the  com- 
binations, that  would  justify  direct  legislation  to  prevent  the 
formation  or  continuance  of  such  combinations;  and  the  rigid 
enforcement  of  such  acts. 

All  the  publications  that  could  be  squeezed  out  of  the  trust 
without  the  application  of  laws  that  would  be  less  justifiable  than 
in  prohibiting  of  trust  organizations  would  result  in  no  material 
public  advantage. 

Others  have  recommended  heavy  reductions  of  duty  or  free 
importation  of  all  goods  and  manufactured  products,  the  domes- 
tic production  of  which  is  controlled  more  or  less  by  the  trust. 

543 


This  would  be  somewhat  like  burning  a  city  to  drive  out  the 
criminals.  All  business  interests  would  collapse  with  the  trust. 

In  the  early  part  of  this  century  it  was  the  custom  of  the 
medical  fraternity  to  apply  the  lancet  to  every  patient  to  take 
away  a  sufficient  amount  of  blood  to  reduce  the  vitality  of  the 
patient  below  the  danger  point  of  the  disease.  Our  tariff  is  the 
key  to  our  prosperity.  We  have  never  had  prosperous  times 
under  low  tariff  or  free  trade  and  we  have  never  established  and 
maintained  for  any  considerable  time  a  sufficient  protection  that 
did  not  result  in  prosperity.  The  old  system  of  blood-letting 
and  withdrawing  the  vital  force  of  the  body  would  be  a  discreet 
-act  compared  to  the  destruction  of  our  tariff  to  wipe  out  the  trust. 

Trust  legislation  should  be  so  specific  and  direct  that  legiti- 
mate business  and  fairly  established  vested  rights  shall  not  be 
infringed  upon  or  destroyed  by  it.  Legitimate  business  interests 
are  being  sufficiently  disturbed  by  the  trust  now  without  having  it 
stand  responsible  for  the  bad  methods  of  the  trust. 


J.  DANA  ADAMS. 

After  having  listened  to  the  many  valuable  papers  presented 
to  this  conference  by  men  so  eminently  qualified  to  enlighten 
and  instruct,  it  is  with  much  hesitation  that  I  venture  to  tres- 
pass upon  the  limited  time  of  this  assembly  by  offering  a  few 
suggestions  upon  those  fundamental  principles  which  underlie 
this  whole  question  of  trusts  and  combinations,  and  which  per- 
haps from  their  very  nature  have  been  overlooked  or  not  fully 
brought  out  in  the  presentation  of  the  subject  already  made. 

The  first  of  these  is  that  human  labor  is  the  true  measure  of 
value  in  measuring  the  cost  of  production  and  distribution  of 
commodities. 

And  the  second  is  the  great  economic  law  that  cost  of 
production  ultimately  fixes  the  market  or  exchangeable  value  of 
commodities. 

Taking  labor  as  the  measure  of  value,  and  for  convenience 
a  day  of  average  labor  as  the  unit  of  value,  material  prosperity  is 
enhanced  and  progress  in  civilization  is  promoted  by  a  decline 
in  value  of  the  products  of  labor  measured  in  this  unit. 

In  other  words,  the  cheapening  of  the  cost  value,  which  is 
simply  the  labor  value  of  commodities,  is  an  unmixed  blessing 
to  humanity. 

Therefore,  any  agency  which  lessens  the  amount  of  human 
labor  which  enters  into  the  production  and  distribution  to  the 

514 


consumer  of  a  commodity,  must  be  regarded  as  desirable  and  of 
benefit  to  mankind. 

For  if  it  is  well  to  cause  two  blades  of  grass  to  grow  where 
only  one  grew  before,  how  much  more  is  it  to  produce  two  bush- 
els of  wheat  with  the  same  expenditure  of  human  labor  as  it  re- 
quired to  produce  one  bushel  before,  or  two  pairs  of  shoes  with 
the  same  amount  of  labor  as  it  required  to  produce  one  pair 
before? 

.Now  if,  under  the  unrestricted  operation  of  the  economic  law 
referred  to,  a  commodity  cannot  long  be  furnished  at  a  market 
value  below  its  cost  value,  or  its  market  value  cannot  long 
be  maintained  much  above  its  cost  value,  then  the  question  of 
primary  importance  in  ascertaining  the  economic  value  of  any 
agency  is  not  whether  it  will  directly  reduce  the  market  value 
of  the  commodity  to  the  consumer,  but  whether  it  will  reduce 
the  cost  value  or  the  actual  amount  of  labor  necessary  to  produce 
and  distribute  it  to  the  consumer,  leaving  to  the  effect  of  this 
law  the  ultimate  reduction  in  its  market  value. 

If  the  principles  thus  briefly  outlined  be  accepted  as  correct, 
every  agency  claiming  a  right  to  exist  under  the  universal  law 
of  the  survival  of  the  fittest  must  be -able  to  demonstrate  its 
ability  to  accomplish  greater  results  with  the  same  amount  of 
labor,  or  the  same  result  with  a  less  amount  of  labor.  And  the 
fact  that^in  accomplishing  certain  results  it  is  able  to  dispense 
with  a  part  of  the  labor  formerly  employed  in  producing  them, 
will  count  in  its  favor,  instead  of  constituting  an  argument 
against  it. 


C.  D.  WILLARD. 

Los  Angeles  Board  of  Trade. 

The  foremost  topic  in  the  political  and  economical  discussion 
of  to-day  is  the  rapid  development  of  the  principle  of  combination 
in  all  industrial  lines.  These  combinations  the  public  calls  by 
the  general  name  of  trusts,  although  they  are,  for  the  most  part, 
not  trusts  at  all,  if  we  hold  that  word  to  its  original  meaning  as 
a  commercial  term.  The  question  has  not  as  yet  developed  into 
a  definite  issue,  but  the  lines  along  which  the  issue  is  to  form 
may  already  be  dimly  distinguished  through  the  haze  of  conflict- 
ing argument  and  assertion.  On  its  face,  the  problem  seems  to 
bo  one  of  mammoth  proportions,  affecting  the  fundamental  prin- 
ciples upon  which  the  business  edifice  has  rested  since  trade  first 
began;  and  yet  this  may  all  be  an  illusion.  Men  have  been  de- 

545 


ceived  before  by  economic  mirages.  It  certainly  concerns  all 
classes  of  people — the  workman,  who  is  himeslf  in  a  trust,  or 
union,  and  who  perhaps  works  for  a  trust;  the  housekeeper  who 
uses  trust-made  articles;  the  investor  who  will  handle  trust  se- 
curities :  the  statesman  who  must  make  and  administer  laws  that 
deal  with  trusts,  and  the  manufacturer  who  is  forced  either  to 
join  a  trust  in  his  line  of  production,  or  to  fight  for  liis  commercial 
life.  That  it  should  be  the  great  issue  of  the  day  is  not  strange; 
on  the  contrary,  we  may  well  wonder  that  we  have  waited  so  long 
to  look  it  squarely  in  the  face. 

As  a  rule,  the  consideration  of  a  question  of  the  immediate 
present  is  rendered  difficult  by  the  fact  that  its  very  nearness 
throws  it  out  of  perspective  and  leads  us  into  error.  This  diffi- 
culty is  in  a  measure  removed  in  the  case  of  the  trust,  for  the  prin- 
ciple of  combination  is  not  new,  nor  is  its  application  in  the  trust* 
form.  It  has  been  before  the  American  people  as  a  minor  issue 
for  over  thirty  years.  The  developments  of  the  past  ten  months, 
astounding  as  they  seem,  nevertheless  involve  no  essentially 
new  problem  for  consideration  by  economists  and  law-makers. 
All  that  is  happening  in  1899  was  predicted  ten  years  ago;  the 
only  cause  for  wonder  lies  in  its  delay  in  coming  to  nass. 

There  are  four  stages  in  this  evolution  down  to  the  latest  form 
of  combination,  which,  as  I  have  said,  is  falsely  called  a  trust. 
The  first  of  these  is  the  pool,  which  originated  among  the  rail- 
roads, and  which,  in  spite  of  adverse  legislation,  is  still  widely 
practiced,  although  in  a  modified  form.  It  was  a  limited  form  of 
1  rust,  for  it  covered  not  the  whole  busine?-  of  the  roads  that  en- 
tered, but  only  certain  specified  lines  of  work. 

The  constitution  provides  that  Congress  shall  have  power  to 
regulate  the  traffic  between  states,  and  under  this  prerogative  the 
Cullom-Eeagan  bill,  now  known  as  the  interstate  commerce  act, 
was  framed  and  passed  in  the  year  1887.  It  forbids  pooling  in 
every  form,  under  severe  penalties.  The  constitutionality  of  the 
law  has  been  tested  and  it  stands.  Pooling  as  an  open  deliberate 
practice  has  ceased,  but  identicallv  the  same  result  is  achieved 
by  a  different  process.  There  is  no  law  that  can  compel  a  railway 
to  go  out  after  business  if  it  prefers  to  sit  still  and  allow  another 
road  to  take  it.  The  A  Route  and  the.B  Route  parallel  each  other 
from  X  to  Y,  and  there  are  ten  million  tons  of  freight  to  be  car- 
ried annually  between  those  two  points;  the  roads  are  not  parties 
to  a  pool;  that  would  be  unlawful;  but  at  certain  intervals  the 
managers  get  together  and  compare  notes  on  the  amount  of  busi- 
ness done  in  certain  lines,  and  if  one  is  getting  more  than  his 
ghare;  he  will,  during  the  period  that  follows,  refrain  from  solicit- 

546 


ing  for  those  commodities,  or  by  any  one  of  a  dozen  methods 
manage  to  throw  the  business  to  his  competitor,  thus  accomplish- 
ing exactly  the  same  result  as  the  pool,  but  without  violating  the 
law.  The  legislation  which  was  intended  to  abolish  the  primary 
trust  has  merely  driven  it  into  a  new  and  utterly  impregnable 
position.  This  we  shall  find  to  be  the  inevitable  tendency  with 
reference  to  all  anti-trust  legislation. 

Next  conies  the  real  trust,  which  is  the  second  stage  of  the 
development.  It  varies  somewhat  as  to  details,  but  in  the  main 
is  as  follows:  there  are  a  dozen  large  factories  producing  the 
same  article,  working  in  competition  with  each  other,  and  cover- 
ing all,  or  a  large  part,  of  that  particular  field.  They  are  tired  of 
fighting,  and  are  ready  to  go  into  an  equitable  arrangement.  A 
schedule  is  drawn  up,  showing  the  value  of  each  plant,  to  each  is 
assigned  a  just  proportion  of  the'  final  organization,  and  trust  cer- 
tificates are  issued  to  each  in  proportion  to  his  share  as  determined 
by  the  schedule.  The  management  of  the  several  factories  is 
placed  absolutely  in-  the  hands  of  the  directors  of  the  central  or- 
ganization. History  does  not  record  the  name  of  the  genius  that 
devised  this  plan,  but  the  first  man  to  put  it  into  practical  and 
extensive  operation  was  John  D.  Eockefeller,  of  the  Standard 
Oil  Company.  That  famous  trust  was  organized  on  a  permanent 
basis  in  1882,  and  the  agreement  includes  the  total  stock  of  four- 
teen companies,  the  partnership  or  individual  rights  of  forty- 
seven  men  and  women,  and  the  majority  stock  of  twenty-six  com- 
panies. It  was  incorporated  in  all  the  states  where  the  trust  was 
to  do  business.  Having  under  its  control  all  the  principal  pipe 
lines,  and  mining  and  refining  the  great  majority  of  th^  entire  oil 
product,  it  was  in  a  position  to  command  special  rates  from  rail- 
ways, which  it  received  by  devices  that  successfully  evaded  the 
interstate  commerce  law.  It  could  and  did  dictate  to  retailers, 
forbidding  them  to  purchase  from  other  producers,  under  fear  of 
having  their  local  market  demoralized  by  competition  direct  from 
the  Standard  refineries.  One  rival  after  another  was  singled  out 
for  treatment,  until  all  were  ruined  or  driven  into  the  combine. 

The  brazen  iniquity  of  this  performance  roused  Congress  to 
action,  and  the  Sherman  law  was  passed  in  1890,  which  declared 
that  all  interstate  combines  of  corporations  engaged  in  the  same 
or  similar  lines  of  industry,  having  for  their  object  the  suppres-ion 
of  natural  competition,  were  unlawful  and  should  be  punished  l\y 
a  fine  and  by  the  imprisonment  of  their  chief  officers.  This  put  a 
stop  to  the  formation  of  genuine  trusts,  and  drove  those  already 
in  existence  into  a  different  form  of  organization.  As  far  as  ef- 


M7 


fecting  the  purpose  it  had  in  view,  viz.,  the  re-establishment  of 
competition,  the  Sherman  law  was  utterly  worthless. 

The  third  stage  of  this  development  was  reached  by  a  natural 
and  easy  route  in  the  effort  to  evade  the  Sherman  law.  The 
trust  organization  was  abolished.  In  its  place  arose  a  genuine  cor- 
poration, having  for  its  purpose  the  operation  of  a  number  of 
factories,  mines  or  whatever  might  be  chosen,  a  corporation  which 
buys  the  various  subordinate  enterprises  outright,  and  owns  and 
runs  them.  The  transfer  is  supposed  to  be  absolute  and  irre- 
vocable, and  the  man  who  parts  with  his  factory,  or  the  stock  com- 
pany that  disincorporates  and  gives  up  its  plant,  receives  in  re- 
turn a  lump  of  preferred  stock  in  the  new  company. 

The  very  latest  phase  of  the  trust  organization,  which  is  the 
plan  under  which  the  present  trusts  are  largely  forming,  differs 
from  the  one  last  described  only  in  that  the  purchase  of  the  plant 
is  a  bona  fide  cash  transaction.  It  would  seem  at  first  glance 
that  this  difference  is  not  material,  and  possibly  the  distinction 
is  not  important  from  a  legal  point  of  view;  but  it  serves  to  com- 
plicate the  political  or  legislative  side  of  the  question,  as  it  intro- 
duces an  innocent  third  party  in  the  shape  of  the  ultimate  holder 
of  the  trust  securities.  The  whole  transaction  is  thus  one  of 
straight  business,  with  nothing  in  the  nature  of  a  quibble  of  a 
makeshift  about  it.  In  cases  where  the  factory  owner  had  ac- 
cepted stock  in  the  new  organization,  there  was  always  the  ques- 
tion as  to  whether  the  transaction  was  genuine  or  not.  In  the 
event  of  the  liquidation  of  the  corporation,  or  a  wind-up  of  its  af- 
fairs, the  preferred  stock  was  to  operate  as  a  first  mortgage  lien 
on  the  tangible  assets,  taking  precedence  over  any  outstanding 
common  stock.  In  other  words  though  the  factory  was  theoreti- 
cally sold,  there  was  a  string  tied  to  it,  by  which  it  could  be  hauled 
back  if  the  scheme  failed  to  accomplish  all  that  was  expected  of 
it.  But  the  latest  form  of  the  trust  presents  no  such  rough  edge 
on  which  the  law  may  fasten  its  clamp.  The  elements  that  enter 
into  the  transaction  are  simple,  and  are  so  fundamental  in  their 
character  that  to  affect  them  in  any  way  the  law  must  tear  up  the 
whole  business  fabric  and  precipitate  the  country  into  financial 
convulsions. 

It  is  quite  impossible  to  obtain  accurate  figures  of  the  trust 
development  of  the  year  1899,  which  exceeds  in  gross  capitaliza- 
tion all  that  which  had  preceded.  The  figures  given  in  news- 
paper articles  are  contradictory  and  evidently  full  of  error.  A 
large  part  of  the  alleged  capital  of  the  new  concerns  is  admitted 
to  be  fictitious,  or  water,  as  it  is  commonly  called.  The  capital- 
ization totals  are  therefore  of  no  particular  value  as  showing  the 

548 


real  extent  of  the  movement.  But  the  question  whether  the  trusts 
now  in  operation  embrace  one-third,  one-half  or  nine-tenths  of 
all  industrial  enterprises  is,  after  all,  not  material.  The  important 
facts  are:  First.  That  certain  trusts  do  cover  certain  articles 
in  their  entirety.  Second.  That  new  trusts  are  constantly  form- 
ing, and  the  field  rapidly  widening.  Third.  That  they  have  dem- 
onstrated by  long  periods  of  success  the  entire  feasibility  of  the 
plan.  Fourth.  That  a  scheme  of  organization  has  been  devised 
that  is  practically  invulnerable  from  destructive  attack  either 
through  national  or  state  law. 

It  is  questionable  whether  any  form  of  law  will  ever  be  de- 
vised which  shall  put  an  end  to  these  combinations.  Laws  may  be 
passed  which  will  correct  certain  of  their  attendant  evils,  as,  for. 
example,  over-capitalization,  which  is  not  an  essential  of  the  trust 
nor  is  it  peculiar  to  it.  But  how  is  it  possible  to  frame  a  law 
which  shall  prevent  men  from  widening  the  scope  of  their  busi- 
ness, along  natural  and  logical  lines,  until  it  includes  all  the 
factories  or  mines  or  stores  that  are  concerned  in  any  one  product? 
Unless  the  government  adopts  socialistic  measures,  and  itself  en- 
ters the  field  of  manufacture  or  mining  or  exchange,  how  can  it 
create  competition,  when  those  who  are  directly  concerned  in  the 
matter  decline  to  have  it?  If  all  the  shoe  men  of  the  country 
choose  to  get  together,  and  unite  as  one  corporation,  by  what 
kind  of  a  legal  process  is  the  government  to  gain  a  footing  among 
them,  and  compel  the  existence  of  competition? 

The  trust  is  of  necessity  an  interstate  affair,  and  hence  is  to 
some  extent  under  the  control  of  the  Federal  government.  While 
we  can  conceive  of  no  constitutional  legislation  which  shall  effect 
its  abolition,  it  is  probably  feasible  to  frame  a  law  governing  inter- 
state corporations  which  shall  require  them  to  take  out  a  charter 
under  Federal  authority,  and  this  charter,  which  is  in  the  nature 
of  a  franchise  for  a  semi-public  utility,  may  lay  down  certain  re- 
quirements. For  example,  the  amount  of  stock  to  be  issued  should 
be  exactly  in  accord  with  the  value  of  the  company's  real  assets. 
The  tax  to  be  paid  might  be  graduated  on  the  company's  income, 
increasing  as  the  profits  passed  a  certain  percentage.  The  ten- 
dency of  such  a  law  would  be  to  forestall  the  effort  to  earn  un- 
reasonable dividends,  and  to  abolish  the  obtaining  of  money  under 
false  pretenses  that  now  prevails  in  the  sale  of  watered  stock. 

But  would  such  a  law  drive  the  Standard  Oil  monopoly 
from  existence,  and  distribute  its  business  among  a  number  of 
individual  firms  and  corporations  ?  No ;  nor  would  any  other  law 
of  a  general  character,  such  as  all  our  laws  must  be,  accomplish 
that  result.  There  is  a  plain,  definite  reason  why  this  is  so,  and  it 

549 


lies  in  the  fact  that  the  trust,  much  as  it  is  berated  and  deplored, 
has  its  foundations  deep  down  in  the  common  sense  and  experi- 
ence of  the  race.  In  the  last  analysis  the  trust  is  logical,  and  com- 
petition foolish.  Here  is  the  world  to  be  supplied  with  a  certain 
article,  and  here  are  we,  the  producers  of  it.  Which  is  best,  th:it 
we  should  each  blunder  on  by  himself  with  inadequate  facilities, 
alternately  flooding  and  starving  the  market,  and  using  a  large 
part  of  the  finished  product  as  ammunition  with  which  to  fight 
each  other,  or  that  we  should  come  to  an  intelligent,  amicable 
understanding,  combine  our  efforts,  stop  the  waste,  cease  fight- 
ing, and,  as  we  say,  get  right  down  to  business?  As  in  the  case  of 
nations,  so  with  individuals,  peace  is  a  thousand  times  better  than 
war.  The  world  never  permanently  goes  back.  When  it  has 
learned  a  good  lesson,  it  abides  by  it.  We  understand  the  folly  and 
waste  of  international  conflict,  and,  as  far  as  the  mistakes  and 
passions  of  men  will  admit,  we  will  abolish  war.  Similarly,  the 
business  world  has  learned  the  great  advantage  to  be  gained  by 
combination;  and  while  certain  limitations  on  human  nature 
make  it  impossible  to  carry  it  to  the  ultimate  lengths,  it  will  grow 
and  extend  and  strengthen  until  it  becomes,  in  spite  of  all  we  may 
say,  or  do,  or  enact,  the  controlling  force  of  production  and  trade. 

We  are  now  face  to  face  with  the  one  essential  and  vital  issue 
of  the  trust ;  and  it  is  a  problem  so  stupendous  that  we  pause  for 
a  moment  almost  in  terror  before  we  cross  the  threshold  of  in- 
quiry. What  is  to  be  the  effect  of  this  change  in  the  world's  busi- 
ness methods  upon  the  people?  It  cannot  be  doubted  that  the 
change  is  of  a  most  radical  character,  amounting  to  a  veritable 
revolution  in  the  world's  economics.  Thus  far  in  the  history  of 
the  race  the  natural  laws  of  supplv  and  demand  and  of  the  com- 
petition of  producers  and  of  distributers  one  with  another,  have 
prevailed,  subject  only  to  such  limitations  as  governments  have 
seen  fit  to  apply. 

The  world  has  passed  through  a  number  of  minor  industrial 
revolutions — the  general  substitution  of  free  labor  for  slave,  the 
abolition  of  government  monopolies,  the  discovery  of  steam,  and 
of  labor-saving  machinery,  the  development  of  quick  transporta- 
tion, etc.,  and  we  are  not  ignorant  of  what  it  means  to  readjust 
man  and  all  his  affairs  to  a  change  of  economic  conditions.  But 
here  is  a  revolution  so  profound  and  far  reaching  in  its  character 
as  to  make  all  that  have  gone  before  it  seem  insignificant  by 
comparison.  Understand,  I  do  not  refer  to  the  mere  formation 
of  individual  trusts,  but  to  the  inevitable  substitution  of  the 
principle  of  combination  for  that  of  competition.  The  next  gen- 
eral movement  in  the  trust  field  will  be  the  swallowing  of  some 

550 


combinations  by  otbers,  until  all  are  practically  in  a  harmonious 
whole.  It  may  take  a  quarter  of  a  century  to  accomplish  this ;  it 
may  be  done  in  five  years.  But  it  is  coming — who  can  doubt  it? 
And  this  period  of  adjustment  will  be  one  of  discontent,  distress, 
failures,  panic,  and  disaster. 

But  this  is  the  darkest  hour  that  is  just  before  the  dawn. 
The  worst  will  have  passed,  and  that  which  is  to  follow  will,  I  am 
convinced,  be  a  vast  improvement  on  any  condition  of  affairs  that 
the  world  has  hitherto  beheld.  The  general  rule  which  applies 
to  all  labor-saving  devices  must  hold  good  here.  The  scale  is 
larger,  but  the  principle  is  the  same.  Gradually  work  will  be 
found  for  hands  that  are  ready  to  accept  it,  in  new  lines  of  devel- 
opment which  the  several  trusts,  or  the  one  great  central  trust, 
as  the  case  may  be,  will  throw  open.  Indeed,  there  is  hope  that 
the  long  period  of  disaster  may  be  shortened  by  the  fact  that  the 
trusts  themselves  will  find  it  greatly  to  their  advantage  to  provide 
work  for  the  discontented  and  dangerous  element.  The  producer, 
moreover,  must  have  a  market  for  his  manufactured  commodity, 
and  that  can  come  only  with  prosperity  among  the  working 
classes. 

The  industrious  and  intelligent  people  of  this  globe  have  cer- 
tain problems  which  in  the  divine  scheme  of  things  they  must 
either  solve  or  suffer  a  certain  loss  of  happiness.  We  are  coming 
to  understand  the  problems  that  concern  the  production  of 
wealth — and  by  wealth  we  mean  the  things  that  contribute  to 
human  comfort — but  we  have  not  learned  even  the  primary  les- 
sons of  its  distribution,  one  of  which  is  that  every  man  should 
have  an  opportunity  to  work  and  to  earn  what  is  necessary  for  his 
family's  support.  Until  we  have  mastered  this  most  elemental 
principle,  upon  which  the  whole  fabric  of  a  self-respecting  and 
generally  contented  community  must  rest,  it  is  folly  for  us  to  at- 
tempt the  solution  of  more  difficult  questions,  such  as  the  scheme 
for  an  equal  division  of  wealth  must  involve.  Neither  have  we 
succeeded  in  solving  the  problem  of  the  panic  and  the  waves  of 
elation  and  depression,  which  at  intervals  sweep  across  our  ocean 
of  commerce  and  throw  frightful  wreckage  to  the  shore.  With 
the  aid  of  science  we  have  met  and  withstood  the  ravages  of  dis- 
ease, we  have  harnessed  the  forces  of  nature  to  our  command,  we 
have  explored  the  heavens  and  we  have  carried  into  the  common- 
est household  knowledge  which  a  few  centuries  ago  was  restricted 
to  the  monks  and  the  clerks.  We  have  accomplished  miracles; 
but  the  poor  starve  almost  at  our  doors.  We  have  piled  up  great 
masses  of  wealth,  but  at  intervals  of  less  than  a  score  of  years,  we 
are  all  affected  by  a  madness,  that  causes  us  to  throw  this  wealth 

551 


about  and  destroy  it.  Terrible  as  these  things  are,  we  have  at 
least  become  hardened  to  them.  We  dare  not  think  of  the  suf- 
ferings of  others,  lest  it  fairly  poison  our  own  cup.  We  have  be- 
come fatalistic ;  these  evils  are  inherent  in  human  nature,  we  say, 
and  can  never  be  eradicated.  That  same  sentiment  has,  in  the 
world's  history,  prevailed  with  regard  to  the  tyranny  of  kings, 
and  slavery,  and  duelling  and  punishment  by  torture;  but  these 
have  all  passed.  Because  we  have  operated  our  business  affairs 
under  the  competitive  system  from  the  beginning,  that  system  is 
not  necessarily  God-given,  for  all  eternity.  Centuries  of  experi- 
ence have  demonstrated  that  the  panic,  over-production,  bad  dis- 
tribution and  uncertainty  of  employment  are  inevitable  accom- 
paniments of  competition.  A  plan  has  suddenly  developed  which, 
without  overturning  our  laws  or  our  social  order,  without  war, 
and  with  nothing  worse  than  a  protracted  period  of  industrial  de- 
pression— which  we  have  learned  by  hard  and  bitter  experience  to 
endure  with  patience — Avill  do  away  with  competition  and  give  us 
co-operation  in  its  stead — not  that  ideal  co-operation  which  the 
socialist  paints  with  colors  so  brilliant  that  they  dazzle  us  unto 
disbelief,  but  a  tangible,  reasonable,  practical  condition  of  com- 
mercial peace.  If  the  trust  is  the  instrument  through  which 
the  change  of  the  world's  affairs  to  a  common  sense  basis  is  to  be 
accomplished.,  then  God  speed  the  trust,  let  us  say. 


EDWARD  P.  EIPLEY. 

President  Atchison,  Topeka  &  Santa  Fe  Railway  System. 

The  Atchison,  Topeka  &  Santa  Fe  Railway  System  is  com- 
.posed  of  something  over  one  hundred  corporations  controlling 
all  the  way  from  one  mile  to  one  thousand  miles  each  at  the  time 
of  lease  or  consolidation,  and  the  total  now  controlled  is,  roughly, 
7,500  miles. 

The  result  to  the  public  of  the  consolidation  as  to  rates  has 
been  to  lower  them — the  force  of  public  opinion  and  legislation 
demand  more  of  a  large  corporation  in  all  directions  than  is  ex- 
pected of  the  smaller  companies,  and  the  larger  roads  are  held 
to  a  more  strict  account  in  all  directions.  The  same  is  true  as 
to  convenience  of  service.  The  system  now  being  operated  as 
an  entity  was  formerly  disjointed  and  disconnected,  besides  being 
in  some  cases  irresponsible. 

The  result  to  employees'  wages  has  been  to  advance  them.  -It 
is  a  well  known  fact  that  wages  on  the  smaller  roads  are  in  almost 
all  cases  lower  than  on  the  larger  systems.  The  result  of  con- 

552 


solidation  on  the  number  of  employees  is  not  considerable  in  any 
direction.  Naturally  the  consolidation  does  away  with  a  few 
officials  and  some  accountants,  ,but  as  a  rule  does  not  affect  the 
number  of  men  required  for  the  physical  operation  of  the  prop- 
erties, and  the  reduction  in  the  official  and  accounting  staff  is 
trifling. 

The  conditions  of  service  on  the  consolidated  lines  are  in  no 
respect  inferior,  and  in  some  respects  superior,  to  those  on  the 
smaller  roads.  'As  before  stated,  the  larger  roads  pay  higher 
wages,  and  the  employees  are,  as  a  rule,  less  subjects  of  favoritism 
and  are  more  justly  treated. 

It  is  difficult  to  say  what  have  Keen  the  results  to  investors 
of  the  various  consolidations  and  absorptions  that  have  taken 
place,  but  it  may  be  stated  as  a  general  proposition  that  the 
owners  of  the  smaller  properties  have  made  more  money  than 
those  of  the  road  by  which  the  smaller  properties  were  absorbed, 
and  more  than  they  could  have  made  had  they  remained  inde- 
pendent. The  small  road  is  often  worth  more  as  an  adjunct  or 
feeder  of  the  large  road  than  as  an  independent  proposition.  In 
the  latter  case,  it  is  worth  only  the  sum  on  which  it  can  earn  a 
fair  rate  of  interest,  while  to  the  larger  road  it  is  worth  what  it 
can  earn  plus  the  profit  on  what  business  it  can  bring  to  the 
larger  road. 

The  intrinsic  values  of  the  properties  absorbed  have  not  been 
changed  by  the  absorption.  It  is  difficult  to  say  whether  the 
process  of  consolidation  has  resulted  in  the  diffusion  or  concen- 
tration of  capital.  Since  the  securities  of  the  absorbing  com- 
pany are  so  widely  distributed,  it  is  fair  to  presume  that  there 
has  been  no  radical  change  in  that  respect. 

With  few  exceptions  each  absorption  or  consolidation  has 
both  relieved  and  intensified  competition.  That  is,  it  has  re- 
lieved us  of  competition  at  one  point,  only  to  bring  us  into  com- 
petition at  another;  and  as  there  is  no  part  of  the  United  States 
where  railway  competition  does  not  exist  either  in  its  direct  or 
indirect  form,  it  is  fair  to  say  that  competition  has  been  restricted 
but  slightly,  if  at  all,  by  the  consolidations  that  have  taken  place. 

Unquestionably  the  result  of  strong  trade  combinations  has 
been  that  the  railroads  have  been  compelled  to  discriminate  in 
their  favor.  The  railroads  being  mistakenly  prohibited  from 
organizing  to  prevent  such  attacks,  are  individually  to  some  ex- 
tent at  the  mercy  of  large  combinations  controlling  immense 
volumes  of  tonnage,  and  the  interstate  commerce  law  and  other 
equally  unwise  legislation  on  the  part  of  national  and  state  bodies 
has  fostered  the  very  evil  it  was  intended  to  prevent.  This  is  not 

553 


to  be  construed  as  an  admission  that  the  railroads  have  heen  or 
are  violating  the  letter  of  the  law :  there  are  legal  ways  of  "pro- 
tecting" the  large  shipper,  and  it  may  be  laid  down  as  an  axiom 
that  until  the  railroads  are  legally  permitted  to  combine  to  resist 
such  attacks,  the  shipper  having  the  largest  amount  of  trans- 
portation to  buy  will  buy  it  cheapest;  this  is  rendered  the  more 
probable  because  the  mercantile  interest  as  a  rule  maintains  that 
such  is  the  correct  principle  and  that  the  "wholesale  and  retail" 
idea  should  govern  in  transportation  as  in  the  sale  of  commodi- 
ties, and  that  interest  is  not  in  the  least  in  sympathy  with  the 
principles  of  the  law.  On  the  other  hand,  the  railroads  are  gen- 
erally in  sympathy  with  the  objects  of  the  law,  but  are  deprived 
by  its  terms  of  the  only  means  by  which  they  can  enforce  its  main 
principles. 

It  should  be  stated  in  justice,  however,  that  some  of  the 
strongest  "combinations,"  or  so-called  "trusts,"  have  consistently 
refused  to  accept  cut  rates,  or  become  parties  to,  or  beneficiaries 
of,  any  infraction  of  the  interstate  law. 

For  the  same  reason  that  a  legalized  combination  among  rail- 
roads would  tend  to  do  away  with  discrimination  in  favor  of 
large  combinations  of  capital  or  trusts,  the  competition  of  roads 
is  even  still  more  potent  in  the  same  direction.  It  is  quite  safe 
to  say  that  were  all  the  roads  of  the  country  under  one  manage- 
ment, there  would  be  no  discrimination  whatever,  and  it  is  prob- 
ably equally  safe  to  say  that  rates  would  be  lower  and  the  service 
better.  But  this  is  not  to  be  construed  as  a  suggestion  in  favor 
of  government  ownership,  than  which  few  greater  calamities 
could  overtake  us.  This  is  evidenced  by  the  conduct  of  the  post- 
office  department,  which,  after  paying  the  railroads  for  trans- 
portation about  28  per  cent  of  its  gross  receipts,  shows  a  deficit 
of  sixteen  millions  a  year,  though  without  any  competition; 
while  the  express  companies,  paying  the  roads  for  transportation 
about  50  per  cent  of  their  gross  receipts  and  subject  to  severe 
competition,  make  satisfactory  returns  to  their  stockholders. 

There  have  been  in  all  ages  and  in  all  countries  those  who 
saw  in  the  introduction  of  labor-saving  devices  the  destruction  or 
degradation  of  the  workingman.  Yet  his  condition  has  con- 
stantly improved. 

And  some  of  us  have  been  taught  to  believe  that  the  great 
economic  principle  is,  free  and  unrestricted  competition.  The 
weaver  displaced  by  the  power  loom,  the  retailer  displaced  by  the 
department  store,  the  traveling  salesman  displaced  hy  the  trust, 
are  all  alike  the  relics  of  a  regime  that  has  passed  away  for  good 
in  spite  of  sentiment  and  in  spite  of  legislation —  a  regime  which 

554 


was  wasteful,  in  that  it  forced  the  consumer  to  pay  more  than  a 
fair  profit  or  forced  him  to  pay  profits  to  middlemen. 

The  economic  tendency  to  larger  combinations  is  irresistible, 
and  to  my  mind  not  dangerous,  but  whether  dangerous  or  not, 
there  is  no  stopping  it. 

Labor  has  by  combination  been  able  to  greatly  improve  its 
condition,  and  labor  organizations  are  neither  more  nor  less  than 
a  trust.  Why  deny  to  capital  the  rights  accorded  to  labor? 

The  average  individual  laborer  has  found  that,  as  an  indi- 
vidual it  is  difficult  for  him  to  obtain  recognition,  or  what  he  con- 
ceives to  be  his  share  of  the  results  of  his  work;  hence  he  com- 
bines with  his  fellow-laborers  that  they  may  jointly  command 
a  respect  and  exercise  a  force,  that  to  the  individual  is  impossible. 

For  precisely  the  same  reason  the  individual  merchant  or  the 
individual  corporation  finds  itself  forced  to  seek  the  co-operation 
of  its  fellows. 

The  labor  organization  succeeds  when  wisely  handled  and  not 
unreasonable  in  its  demands;  when  that  limit  is  exceeded  it  fails. 
So  also  the  trust  succeeds  only  when  it  reduces  costs  and  is  con- 
tent with  fair  returns;  to  exceed  this  limit  is  to  invite  the  com- 
petition it  most  dreads. 


STUYVESANT  FISH. 

President  of  the  Illinois  Central  Railroad  Company. 

The  Illinois  Central  Eailroad  Company  is  not  a  consolidation 
of  any  other  companies  whatever,  but  is  precisely  the  corporate 
entity  created  by  the  act  of  the  state  of  Illinois  to  incorporate 
that  company,  approved  February  10,  1851.  The  railroad  con- 
templated by  and  built  under  that  charter  is  705.5  miles  in  length, 
and  lies  in  Illinois.  The  Illinois  Central  is,  however,  operating, 
as  lessee  or  agent,  other  railroads  in  connection  with  its  own, 
aggregating  all  told  3,769.74  miles,  located  in  eleven  different 
states. 

The  early  history  of  all  the  leased  lines  is  not  as  clear  as  it 
might  be,  but  from  the  records  and  from  a  personal  knowledge 
which  dates  back  to  1871,  I  can  say  that  the  number  of  railroad 
companies  absorbed  by  or  consolidated  into  the  various  lines  now 
operated  by  the  Illinois  Central  have  been  at  least  as  many  as 
fifty-five.  Eeference  is  here  made  only  to  distinct  corporations, 
and  no  account  is  taken  of  mere  changes  of  name,  nor  yet  of 
mergers,  consolidations,  and  the  like.  On  the  other  hand,  it 
should  not  be  assumed  that  the  Illinois  Central  Eailroad  Company 

555 


has  dealt  directly  with  each  of  these  companies.  It  has,  in  some 
cases,  leased  railroads  which  had  previously  been  formed  by  the 
consolidation  of  smaller  ones. 

Having  had  occasion  to  go  quite  thoroughly  into  the  matters 
germane  to  the  field  of  inquiry  of  the  conference  on  trusts,  in  an 
unpublished  report  made  to  the  board  of  directors  of  the  Illinois 
Central  Eailroad  Company  May  18, 1897,  some  figures  there  given 
I  shall  here  employ. 

It  was  not  until  after  the  Civil  War  that  the  consolidation  of 
railroads  into  large  systems  began  to  make  itself  felt.  Poor's 
Manual  for  1869-70,  after  making,  at  page  xxix,  under  the  head- 
ing "Construction,  Organization  and  Management  of  Kail- 
roads,"  some  interesting  remarks  as  to  their  control  by  the  gov- 
ernment, goes  on  to  say,  at  page  xxx,  "The  company  having  con- 
trol of  the  longest  line  with  us  is  the  Chicago  &  Northwestern, 
which  has  a  mileage  of  1,257  miles.  The  Pennsylvania  Eailroad 
Company  operates  538  miles,  the  Eeading  807,  the  Erie  774,  the 
New  York  Central  692."  The  Illinois  Central  was  then  operat- 
ing 895  miles,  as  shown  on  page  319  of  the  same  book,  although 
it  is  not  mentioned  on  the  page  quoted  from. 

The  effect  of  the  amalgamations  of  railroads  which  have  since 
taken  place  is  well  shown  in  a  report,  entitled  "Changes  in  the 
Eates  of  Charge  for  Eailway  and  Other  Transportation  Services, 
Prepared  under  the  Direction  of  John  Hyde,  Statistician,  by  H. 
T.  Newcomb,  Chief  of  the  Section  of  Freight  Eates  in  the  Divi- 
sion of  Statistics."  All  the  figures  there  given  are  in  gold,  or  its 
equivalent,  and  they  cover,  with  regard  to  substantially  all  the 
railroads  in  the  United  States,  the  long  period  from  1867  to  1896 : 

In  1886  the  average  revenue  per  ton  was f  2  06 

In  1896    "          «  "  "      "       "  .  1  56 


Decrease 8  0  50  or  24.27?? 

In  1886  the  average  rate  per  ton  per  mile  was #1.160 

In  1896    "          "          "       "      "      "  "     .  .    <?.745 


Decrease..  .....     -    ?.415  or  35.78£ 

Information  as  to  later  dates  down  to  June  30,  1898,  can  be 
obtained  from  the  reports  of  the  Interstate  Commerce  Commis- 
sion on  "Statistics  of  Eailways."  In  using  the  latter  it  must  be 
remembered  that  as  the  net  earnings  of  the  railroads  are  given 
without  deducting  taxes,  there  is  in  them  a  gross  and  constant 
over-statement.  The  steady  fall  in  the  rate  per  ton  per  mile 
from  1.925  cents  in  1867  to  .753  cents  in  1898,  shows  the  effect 
of  consolidation  on  freight  rates. 

That  the  rate  per  passenger  per  mile  has  not  fallen,  if  at  all, 

556 


in  like  proportion,  is  due  to  the  better  accommodations,  higher 
speed,  and  greater  comfort  now  afforded.  No  one  would  to-day 
consent  to  travel  as  all  had  to  travel  formerly,  without  sleeping 
cars,  parlor  cars  or  dining  cars,  without  through  connections  and 
subject  to  repeated  delays  and  constant  changes,  including  the 
rechecking  of  baggage  and  the  purchase  of  a  ticket  at  the  end 
of  each  short  railroad. 

In  1886  the  average  fare  per  passenger  was ^41.39 

In  1896    "         "         "       "  "  "    -  -  ?34.30 


Decrease  -  -  -    H.09  or  17.13^ 

In  1886  the  average  rate  per  passenger  per  mile  was ?2.208 

In  1896    "          "          "       "  "        "       "    .   ..  ?1.979 


Decrease- ?.229  or  10.37$ 

As  to  the  convenience  and  efficiency  of  the  service  resulting 
from  consolidations,  a  comparison  of  time  tables,  and  especially 
of  freight  schedules,  in  force  before  and  after  consolidations 
would  be  instructive,  or,  better,  the  testimony  of  shippers  and 
consignees  at  distant  points  as  to  the  time  which  is  now,  and  was 
then,  actually  consumed  in  delivering  freight.  Their  testimony 
as  to  adjustment  of  claims  against  one  consolidated  corporation 
and  those  against  a  number  of  small,  independent  ones  would 
be  instructive. 

The  time  of  merchandise  freight  trains  has  been  reduced : 

Chicago  to  New  Orleans,  from  80  hours  to  55,  saving  25  hours. 
Chicago  to  St.  Louis,  from  30  hours  to  16,  saving  14  hours. 
St.  Louis  to  New  Orleans,  from  59  hours  to  38}^,  saving  20}^  hours. 
Chicago  to  Sioux  City,  from  43  hours  to  33^,  saving  9^  hours. 

The  average  time  in  which  freight  trains  are  actually  moved 
has  been  decreased  in  a  much  greater  ratio,  owing  to  better  track, 
improved  engines,  passing  tracks  and  other  facilities,  and  a  much 
better  organization  and  esprit  du- corps. 

As  an  illustration,  showing  the  present  possibilities,  a  train 
consisting  of  twenty-five  Illinois  Central  standard  refrigerator 
cars,  containing  11,250  bunches  of  bananas,  was  moved  from 
New  Orleans  to  Chicago  on  February  20,  1894 — 912  miles — in 
35  hours  and  45  minutes,  or  an  average  speed,  including  stops, 
of  25.45  miles  per  hour.  This  was  done  without  any  unusual 
preparation  or  interfering  with  the  regular  service.  Our  banana 
trains  are  run  from  New  Orleans  to  Chicago  on  established  sched- 
ules of  47  hours  and  30  minutes.  Our  manifest  freight  trains 
daily  make,  with  great  regularity,  schedules  jiearly  as  fast  as 
those  set  for  the  banana  trains. 

557 


In  1886  the  number  of  tons  of  freight  carried  one  mile 

per  mile  of  railroad  operated  was 344.564 

In  1896  it  was 657,890 


Increase -  -  313,326  or  90.93f«-' 

Showing  that,  notwithstanding  the  increase  in  mileage,  the 
intensity  of  service  in  the  carriage  of  freight  has  also  increased. 

In  1877,  before  the  Illinois  Central  had  control  of  the  railroad 
from  Cairo  to  New  Orleans,  the  fastest  passenger  trains  con- 
sumed 47  hours  and  45  minutes  in  going  from  Chicago  to  New 
Orleans  (912  miles),  and  47  hours  in  returning  northward. 

The  time  consumed  has  been  reduced: 

Chicago  to  New  Orleans,  from  35  hours  50  minutes  to  26  hours,  thus 

avoiding  a  second  night  in  the  cars. 

Chicago  to  Sioux  City,  from  22  hours  to  15  hours  30  minutes. 
Chicago  to  St.  Louis,  from  10  hours  50  minutes  to  8  hours. 

In  1886  the  number  of  passengers  carried  one  mile  per 

mile  of  railroad  operated  was 54,840 

In  1896  it  was 72,381 


Increase..  .-17,541     r  31.99<? 

Showing  that,  although  so  many  miles  of  railroad  have  been 
added,  the  intensity  of  the  service  in  the  carriage  of  passengers 
has  increased.  . 

As  a  result  of  consolidation  employees  are  privileged  to  work 
for  standard  wages  under  standard  rules,  with  the  assurance  of 
continued  employment  and  a  chance  to  rise  to  the  highest  places 
in  the  service.  Every  one  of  the  superior  officers  of  the  Illinois 
Central  Eailroad,  excepting  those  in  the  legal  department,  has 
risen  from  the  ranks  in  the  service  of  that  or  some  other  railroad 
company. 

The  earnings,  which  have  sustained  a  uniform  rate  of  divi- 
dend since  the  close  of  1890,  have  also  enabled  the  company  to, 
thus  far,  go  on  pajring  the  standard  scale  of  wages  in  all  branches, 
without  even  a  temporary  reduction.  It  is  to  be  hoped  that  with 
a  return  of  prosperous  times  the  men  will  be  mindful  of  how  far 
the  enhanced  purchasing  power  of  the  money  given  them  has 
operated  to  increase  their  pay  during  all  these  hard  times. 

In  1877  reductions  of  from  10  to  25  per  cent  were  made  in 
a  scale  of  compensation  lower  than  the  one  now  in  force.  The 
employees  of  the  Illinois  Central  Eailroad  Company  never  have 
received  higher  pay  than  at  present. 

In  1886  the  company  employed  8,516  persons,  and  paid  them 
$4,937,955,  being  an  average  of  $580  to  each. 

558 


Tn  1896  it  employed  19,647,  and  paid  them  $11,699,590,  being 
an  average  of  $595  to  each. 

The  comparatively  small  increase  in  the  yearly  pay  was  due 
to  lessened  hours  of  work,  and  to  the  absence  in  recent  years  of 
any  large  payments  to  train  crews  for  overtime. 

On  small,  independent  roads  wages  were  often  fixed  by  favor, 
and  very  generally  limited  to  the  utterly  inadequate  means  of 
bankrupt  concerns.  Standard  wages  represent  the  maximum 
scale  which  has  thus  far  been  secured  by  thoroughly  well  organ- 
ized combinations  of  labor  from  first  one  and  then  another  of 
the  railroad  companies,  which,  through  the  personal  vanity  of 
their  managers  and  the  natural  rivalry  of  the  corporations,  are, 
and  have  ever  been,  utterly  unorganized  for  mutual  protection. 

I  do  not  wish  to  be  understood  as  opposing  combinations  of 
labor.  On  the  contrary,  I  believe  certain  of  them  work  for  the 
general  good,  as  do  also  certain  combinations  of  capital.  More- 
over, the  best  paid  men  generally  do  the  best  work.  But  I  am 
stating  facts,  and  not  writing  an  essay  on  what  should  be. 

Except  in  the  accounting  offices  and  in  the  purely  clerical 
branches  of  the  service,  I  fail  to  see  how  consolidation  can  reduce 
the  number  of  men  employed.  On  the  contrary,  it  generally  leads 
to  increased  traffic  and  increased  emplo}anent. 

The  number  of  miles  operated  and  the  number  of  men  em- 
ployed by  the  Illinois  Central  Eailroad  Company,  and  in  and 
since  1892  by  that  company  and  the  Yazoo  &  Mississippi  Valley 
Railroad  Company,  taken  together,  have  been  as  follows: 

Miles       Men  Employed 
Years.  Operated.        June  30th. 

1885 2,066  8,485 

1886 2,066  8.576 

1887 2,355  9,915 

1888 2,355  11,316 

1889 2,875  10.669 

1890 2,875  13.823 

1891 2,875  15,789 

1892 3,695  20,314 

1893 3,695  18.828 

1894 3,695  16,095 

1895 3,695  17,080 

1896 3,934  20,581 

1897 3,937  23,569 

1898 4,615  25,212 

1899 ...  4,626  28,883 

Increase  in  miles  operated  since  1885 2,560  or  123.91$? 

Increase  in  number  of  men  employed 20,398  or  210.40^ 

Number  of  men  employed  per  mile  operated — 

In  1885 4.11 

In  1899 6.24 

Increase  slightly  more  than  2  men  per  mile,  or  over  50$, 

609 


Conditions  of  service  on  large  railroads  are  controlled  l>y 
standard  rules,  which  clearly  define  each  man's  duties  and  powers 
and  his  relation  to  those  areund,  above  and  below  him.  On  small, 
independent  railroads,  the  conditions  were  necessarily  dependent 
almost  solely  on  the  temper,  health  and  momentary  engagements, 
in  short,  on  the  heredity  and  environment,  of  a  local  officer  of 
limited  experience.  In  this  connection  some  valuable  informa- 
tion might  be  gained  by  asking  a  great  number  of  men  now  in 
the  employ  of  several  of  the  large  railroad  companies  two  ques- 
tions, viz : 

First — Have  you  ever  worked  on  a  small,  independent  rail- 
road in  your  present  capacity? 

Second — If  so,  which  service  do  you  prefer? 

Had  I  the  time  to  do  so,  it  would  be  an  easy  matter  to  take 
from  the  files  of  such  a  paper  as  the  Financial  Chronicle  both  the 
dividends  and  interest  paid,  and  the  prices  of  stocks  and  bonds. 
I  cannot  recall,  in  the  last  ten  years,  a  single  consolidation  which 
has  resulted  in  a  higher  rate  of  dividend  or  of  interest  being  paid, 
and  it  is  notorious  that  all  the  reorganizations  made  in  recent 
years  have  been  based  on  a  very  material  reduction  in  inteTest. 

Competition,  adverse  legislation,  increased  taxes,  enhanced 
wages,  and  the  better  service  required  by -the  public,  long  since 
made  it  impossible  for  railroads  in  the  West  to  sustain  the  10  per 
cent  rate  of  distribution  which  prevailed  thirty  years  ago. 

More  than  twelve  years  ago  the  rate  on  the  Illinois  Central 
had  fallen  to  7  per  cent  on  the  then  capital  of  $29,000,000,  the 
amount  distributed  in  1886  being  $2,030,000. 

The  increase  in  the  capital  in  1887  to  $40,000,000,  the  bad 
effects  of  legislation  at  that  time,  especially  in  Iowa,  and  of  the 
interstate  commerce  law,  forced  a  reduction,  in  1888,  to  6  per 
cent,  which  rate  was  maintained  until  1890,  when,  on  the  increase 
of  the  capital  to  $45,000,000,  a  further  reduction  in  the  rate  to  5 
per  cent  was  made  necessary  by  a  very  material  increase  in  the 
pay  of  employees,  especially  in  the  train  service,  and  by  the  deter- 
mination reached  by  the  board  of  directors  to  bring  the  prop- 
erty, as  rapidly  as  possible,  up  to  higher  standards  of  mainten- 
ance and  of  service. 

During  the  long  depression  in  railroad  and  general  business, 
which  has  been  almost  continuous  since  the  failure  of  Messrs. 
Baring  Bros  &  Co.  in  November,  1890,  the  share  capital  of  the 
company  has  again  been  increased  from  $45,000,000  to  $52,500,- 
000.  Through  this  period  of  6^  years,  dividends  at  the  uniform 
rate  of  5  per  cent  per  annum  have  been  earned  and  regularly 
paid.  Investigation  will  show  that  no  other  large  railroad  com- 

560 


pany  has,  throughout  this  period,  uniformly  maintained  its  rate 
of  dividend. 

Not  only  is  there  no  water  in  the  stock  of  the  Illinois  Central, 
but  the  aggregate  capitalization  of  the  company,  including  all 
of  the  bonds  and  all  of  the  stock,  does  not  represent,  by  many 
millions  of  dollars,  the  money  which  has  actually  been  put  into 
the  property. 

Attention  is  invited  to  the  following  tables,  which  compare 
the  capitalization  of  the  railways  of  Great  Britain  with  those  of 
the  United  States  in  1890  (which  was  the  first  year  for  which  the 
Interstate  Commerce  Commission  published  statistical  reports) 
and  in  1898 : 

RAILWAYS   IN   THE   UNITED  KINGDOM. 

STATED  IN  DOLLARS,  £1  BEING  TAKEN  AS  WORTH  85. 


YEAH  ENDED 
DEC.  31ST,  1890 

YEAR  ENDED 
DEC.  31ST,  1898 

INCREASE  IN  NINE  YEARS 

AMOUNT 

PER  CENT. 

Miles  operated  

20,073 

21,659 

1,586 

7.90 

Capital  paid  up  
Capital  paid  up  per 
Mile  operated  — 
Gross  Receipts  
Gross  Receipts  per 
Mile 

$4,487,360,130 

223,550 

399,743,510 

19,915 

85,672,342,310 

261,895 
481,262,505 

22,220 

$1,184,982,180 

38,345 
81,518,995 

2,305 

26.41 

17.15 
20.39 

11.57 

RAILWAYS   IN  THE  UNITED   STATES. 


YEAR  ENDED 

Y'EAR  KNDED 

JUNE  30TH,  1890 

JUNE  30TH,  1893 

AMOUNT 

PER  CENT. 

Miles  operated  

156,404 

184,648 

28,244 

18.06 

Capitalization  
Capitalization    per 

Mile             -  -  -- 

89,437,343,420 
60,340 

810,818,554,031 
60,343 

81,381,210,611 
3 

14.64 

*000 

Gross  Receipts  
Gross  Receipts  per 
Mile 

1,051,877,632 
6,725 

1,247,325,621 
6,755 

195,447,989 
30 

18.58 
045 

*Less  than  one-half  of  one-hundredth  of  one  per  cent. 

561 


The  figures  for  the  United  Kingdom  of  Great  Britain  and 
Ireland  are  taken  from  the  returns  to  the  British  Board  of  Trade, 
and  those  for  the  United  States  from  the  reports  of  the  Inter- 
state Commerce  Commission  on  "Statistics  of  Railways  in  the 
United  States." 

It  will  be  seen  therefrom  that,  while  the  number  of  miles 
of  railroad  in  the  United  States  has  increased  18.06  per  cent, 
their  capitalization,  including  both  bonds  and  stock,  has  in- 
creased only  14.64  per  cent;  and  that  the  increase  in  the  capi- 
talization per  mile  of  railroad  is  $3,  a  sum  too  small  to  be  ex- 
pressed in  percentages;  less  than  one-half  of  one-hundredth  of 
one  per  cent. 

Also,  that  the  gross  receipts  of  the  railroads  in  the  United 
States  have  increased  in  almost  exactly  the  same  ratio  as  the 
miles  operated,  viz.,  18.58  per  cent,  while  their  gross  receipts 
per  mile  have  increased  $30,  or  less  than  one-half  (45-100;  of  one 
per  cent.  This  in  a  country  which  has  developed  enormously  in 
the  meanwhile,  and  whose  population  is  estimated  by  the  Inter- 
state Commerce  Commission  to  be  increasing  at  the  rate  of  1,250,- 
000  per  annum. 

On  the  other  hand,  in  the  same  time,  in  the  United  Kingdom : 

The  number  of  miles  operated  increased  7.9  per  cent. 
The  capital  increased  26.41  per  cent. 
The  capital  per  mile  operated  increased  17.15  per  cent. 
Gross  receipts  increased  in  amount  20  39  per  cent. 
Gross  receipts  per  mile  operated,  11.57  per  cent. 

While  it  is  true  that,  as  a  whole,  the  English  railways  are 
better  built  than  ours,  there  are  many  points  in  which  ours  excel 
them,  and  there  are  also  thousands  of  miles  of  railroad  in  the 
United  States  which  are  well  and  permanently  constructed. 

The  capitalization,  including  bonds  and  stocks,  of  the  rail- 
roads in  the  United  States,  is  $60,343  per  mile.  That  of  the  rail- 
ways in  Great  Britain  £53,379  per  mile,  which,  at  $5  to  the  pound, 
equals  $261,895. 

The  increase  in  the  capitalization  of  the  railroads  of  the 
United  States,  per  mile,  in  nine  years,  has  been,  as  above  stated, 
three  dollars. 

The  increase  in  the  capitalization  of  the  British  railways  per 
mile,  during  the  same  nine  yea*rs,  has  been  £7,669,  or,  at  $5  to 
the  pound,  $38,345. 

The  figures  are  given  as  reported,  without  accepting  respon- 
sibility for  their  accuracy.  Those  for  the  railroad?  in  the  United 
States  include  the  many  millions  of  dollars  of  bonds  and  stocks 
of  railroad  companies  which  are  owned  by  other  railroad  eom- 

562 


panies,  and,  to  that  extent,  they  greatly  overstate  the  capital  of 
the  railroads  in  the  United  States  actually  held  by  the  public.  A 
candid  consideration  of  these  figures  shows  that  the  ancient  myth 
about  railways  in  the  United  States  being  over-capitalized  has 
no  basis  in  fact. 

The  only  gauge  of  the  value  of  railroad  property  is  its  returns 
in  dividends,  or  the  market  price  of  its  securities. 

In  January,  1877,  of  the  $29,000,000  of  Illinois  Central  cap- 
ital stock  outstanding,  about  $15,700,000  (or  54.14  per  cent)  was 
held  in  Great  Britain,  $7,700,000  (or  26.55  per  cent)  in  Holland, 
and  only  $5,600,000  (or  19.31  per  cent)  in  America. 

At  present  705  officers  and  employees,  other  than  directors  of 
the  corporation,  are  registered  on  the  books  of  the  company  as 
holding  2,554  shares. 

The  number  of  stockholders  in  each  of  the  eleven  states  in 
which  the  company  is  now  operating  railways  varies  from  seven 
in  Indiana  to  767  in  Illinois.  The  total  number  of  stockholders- 
in  those  states  is  1,126,  and  they  hold  33,995  shares. 

There  are  resident  in  the  United  States  3,868  stockholders, 
owning  346,207  shares,  or  over  57  per  cent  of  the  total  capital 
stock  of  $60,000,000;  in  Great  Britain  2,543,  owning  198,616 
shares;  elsewhere  115,  owning  55,125  shares. 

All  told,  the  books  show  5  holdings  of  5,000  shares  or  over; 
85  of  1,000  shares  or  over;  93  of  500  shares  or  over;  694  of  less 
than  500  but  more  than  100  shares;  455  of  exactly  100  shares 
each,  and  5,194  of  less  than  100  shares.  The  number  of  stock- 
holders registered  on  the  books  is  6,526.  Barely  one-seventh  of 
them  own  over  100  shares  apiece. 

By  way  of  contrast,  it  should  be  remembered  that  in  1873  the 
capital  consisted  of  254,794  shares,  or  $25,479,000,  of  which  130,- 
438  shares,  or  51.19  per  cent,  was  owned  in  Great  Britain;  79,863 
shares,  or -31. 34  per  cent,  in  Holland;  9,978  shares,  or  3.92  per 
cent,  elsewhere  out  of  the  United  States,  leaving  as  owned  in 
the  United  States  only  34,515  shares,  or  13.55  per  cent. 

The  number  of  stockholders  in  the  United  States  then  was 
338,  and  they  owned  less  than  one-seventh  of  the  capital  and 
scarcely  more  than  the  number  of  shares  which  are  now  owned 
by  residents  of  the  eleven  states  served  by  the  railroad.  There 
was,  at  that  time,  practically  no  ownership  of  shares  in  any  of 
those  states. 

The  number  of  individual  proprietors  is,  however,  much 
larger  than  that  of  the  registered  stockholders,  and  the  average 
interest  of  each  much  smaller  than  as  shown  above,  owing  to 
trusts  in  the  settlement  of  estates,  partnerships,  joint  ownerships, 

563 


and  the  custom,  so  common,  especially  in  England,  of  passing 
certificates  registered  in  the  names  of  bankers  from  hand  to  hand, 
in  settlement  of  transactions  at  the  Stock  Exchange. 

Whether  the  inclusion  of  other  railroads  in  the  Illinois  Cen- 
tral system  has  lessened  purely  local  competition,  is  somewhat 
questionable.  While  I  incline  to  think  it  has,  the  far  more  de- 
structive general  competition  of  rival  markets  and  of  rival  rail- 
roads has  gone  on  without  let  or  hindrance.  In  the  Western 
states  there  is  no  check  on  the  building  of  new  railroads,  such 
as  there  is  in  New  York,  Massachusetts  and  elsewhere.  Hence 
any  Western  company  can  at  any  time  build  into  a  territory 
already  well  served  by  existing  railroads.  There  is  nothing  in 
the  leasing  or  the  acquiring  of  rival  lines  which  amounts  to  a 
guarantee  against  future  and  new  competition  of  the  most  de- 
structive kind.  Our  leasing  of  other  railroads  has  not  intensified 
competitive  conditions. 

Of  late  I  should  say  that  the  formation  cf  so-called  trusts  and 
combinations  has  had  no  effect  whatever  upon  rates.  The  present 
managers  of  industrial  trusts  are  too  broad-minded,  and  know 
the  law  too  well,  to  hope  to  build  themselves  up  in  that  way.  The 
very  fact  of  their  enjoying  a  practical  monopoly  in  their  own 
line  precludes  the  possibility  of  their  profiting  thereby. 

So  far  as  I  know  or  have  heard  for  a  long  time,  there  has  been 
no  discrimination  in  favor  of  such  combinations.  It  is  true  that 
I  was  asked  for  something  of  the  kind  within  a  year,  and  promptly 
refused  to  grant  it.  If  such  discrimination  exists,  it  is  due  to 
some  radical  difference  in  the  circumstances,  such  as  the  large 
merchant  owning  his  cars  or  giving  prompt  dispatch  to  those 
of  the  carrier,  which  the  small  merchant  does  not  and  cannot 
do,  or  to  his  shipping  by  the  trainload  as  against  a  carload.  This 
difference  between  wholesale  and  retail  trade  is  recognized  the 
world  over  and  is  unavoidable.  It  seems  to  be  inherent  in  nature. 
Napoleon  is  credited  with  having  said,  "God  fights  on  the  side 
of  the  heavy  battalions,"  and,  what  is  more  to  the  purpose,  the 
planets  revolve  in  their  orbits  in  obedience  to  the  attraction  of 
the  greater  mass  of  the  sun.  Struggle  against  it  as  we  may,  this 
condition  will  continue  to  prevail  in  spite  of  "Bulls  against  the 
Comet."  The  thing  is  simply  beyond  human  control.  The  feder- 
al government  recognizes  it  in  the  sale  of  stamps,  and,  to  the 
newspapers,  in  greatly  lessened  charges  for  postage. 

Except  in  increasing  the  difference  between  the  largest  whole- 
sale shipments  and  the  smallest  retail  shipments  of  the  same  com- 
modity, I  think  railroad  consolidation  exercises  no  influence  for 
or  against  the  trust  idea.  There  was  a  time  when  the  trusts,  or 

564 


certain  of  them,  were  believed  to  control  certain  railroads.  Given 
unlimited  consolidation  of  railroads — as  their  capital  must  ex- 
ceed that  of  the  industrial  trusts — there  seems  little  to  be  feared. 

On  the  contrary,,  as  the  rate  making  power  becomes  centered 
in  fewer  hands,  the  men  wielding  it  necessarily  become  more  con- 
servative and  realize  that  -the  vastness  of  the  interests  committed 
to  their  care  requires  them  to  stand  for  law  and  equal  justice  to 
all.  Eailroad  property  is  in  its  nature  so  scattered  as  to  require 
the  constant  protection  of  the  law,  day  and  night,  to  such  an  ex- 
tent as  to  make  its  managers  and  owners  more  dependent  on  just 
government  than  are  any  others.  This  fact  is  now  very  generally 
appreciated. 

In  thus  considering  certain  questions  which  have  come  within 
the  administration  of  the  Illinois  Central  Kailroad  Company  I 
express  my  personal  views  solely,  and  my  statements  are  not  in- 
tended, and  must  not  be  taken,  as  binding  the  corporation  which 
I  serve.  All  the  powers  of  that  corporation  are,  by  law,  vested  in 
its  board  of  directors,  and  they  have  not  been  consulted  in  respect 
to  these  statements,  much  less  have  they  authorized  me  to  make 
them. 

A  recess  was  taken  at  1  o'clock  until  3  o'clock. 


AFTERNOON  SESSION,    SEPTEMBER   16. 

MEETING  OF  COMMITTEE  ON  RESOLUTIONS. 

When.it  became  known  that  it  was  the  desire  of  William  Jen- 
nings Bryan  to  present  resolutions  to  the  committee,  and  had 
requested  that  no  report  be  made  until  he  was  given  a  hearing, 
quite  a  change  was  wrought  in  the  situation.  Many  who  had 
opposed  reporting  resolutions  promptly  advocated  their  introduc- 
tion, and  it  looked  at  one  time,  Friday  afternoon,  as  though  the 
New  York  and  Nebraska  delegations  would  be  able  to  agree  on  the 
substance  of  resolutions.  Saturday  morning  Chairman  Luce  as- 
sembled the  committee,  at  the  conclusion  of  Mr.  Bryan's  address ; 
but,  by  this  time,  the  idea  spread  that  resolutions  could  not  be 
passed  without  party  politics  getting  into  the  question  and  mar- 
ring the  good  effects  of  the  conference.  Furthermore  it  was  felt 

565 


that  the  adoption  of  resolutions  would  not  enhance  the  influence 
of  the  conference  upon  the  public  mind. 

The  members  at  noon,  and  after  long  debate,  reaffirmed  its 
decision  of  the  preceding  clay,  recommending  that  no  resolution 
expressing  the  views  of  the  convention  on  the  trust  question  be 
adopted.  This  conclusion  was  reached  with  a  view  of  keeping 
politics  out  of  the  conference,  and  in  the  interests  of  harmony. 
After  Chairman  Luce  had  rapped  for  order  Attorney-General 
Gaither,  of  Maryland,  presented  an  order  giving  all  delegates  the 
privilege  of  submitting  resolutions  to  the  committee  without  be- 
ing read  or  debated  in  the  convention,  with  the  understanding 
that  all  such  documents  were  to  be  printed  in  the  official  pro- 
ceedings. J.  C.  Hanley  spoke  in  support  of  the  suggestion. 
Delegate  Dowe,  of  New  York,  expressed  the  opinion  that  no  reso- 
lution should  be  passed  at  the  conference.  S.  H.  Greeley,  of  Chi- 
cago, followed  and  asserted  it  would  be  impossible  to  frame  a  reso- 
lution that  would  meet  the  approval  of  the  entire  body.  He 
thought  the  committee  should  abide  by  its  original  decision.  Ed- 
ward Eosewater,  of  Nebraska,  said  that  if  a  resolution  were  to  be 
passed  it  should  be  intelligent  and  tangible.  He  did  not  want 
the  conference  to  make  itself  ridiculous  by  trying  to  express  its 
views  in  generalities.  E.  C.  Crowe,'  of  Missouri,  objected  to  the 
Gaither  order.  He  thought  it  would  serve  no  good  purpose  and 
certainly  would  not  accurately  reflect  the  sentiments  of  the  gath- 
ering, for  the  reason  that  many  delegates  would  not  avail  them- 
selves of  the  opportunity  to  have  resolutions  published  in  the  pro- 
ceedings. Edward  Keasbey,  chairman  of  the  sub-committee  of 
five,  said  he  had  talked  with  Mr.  Bryan  on  the  subject,  and  that 
Mr.  Bryan,  after  reflection,  had  withdrawn  the  resolution  he  had 
prepared,  and  had  advised  that  the  conference  take  no  action 
along  that  line. 

It  was  noticeable  all"  through  the  contest  over  resolutions  that 
neither  political  nor  trust  lines  were  drawn.  This  is  evident  by 
a  glance  over  the  following  names  of  some  of  the  delegates  who 
took  pronounced  positions. 


566 


FOR   RESOLUTIONS.  AGAINST   RESOLUTIONS. 

Bryan,  Neb.  Blair,  N.  H. 

Cockran,  N.  Y.  Smith,  Tex. 

Shaw,  N.  Y.  Dill,  N.  J. 

Rosewater,  Neb,  Weil,  Pa. 

Gaines,  Tenn.  Dowe,  N.  Y. 

Jones,  Ind.  Lockwood,  Pa. 

Atkinson.  W.  Va.  Clarke,  Iowa. 

Pingree,  Mich.  Luce,  Mich. 

Thurber,  N.  Y.  Collins,  111. 

Potter,  Pa.  Jones,  Wis. 

Keasbey,  N.  J.  Search,  Pa. 

Brown,  Ark. 

Crow,  Mo. 

Foster,  Ohio. 

Chairman  Howe  called  the  conference  to  c-rcler  at  3  o'clock 
and  appointed  the  following  committee  on  finance  and  publica- 
tion : 

A.  C.  Bartlett,  111.  EX-OFFICIO  : 

R  D.  Sutherland,  NeK  Franklin  H.  Head,  111. 

Thomas  M.  Osborne,  N.  Y.  Ralnh  M  Easlev  111 

William  Dudley  Foulke,  Ind. 

T.  B.  Walker,  Minn. 

George  E.  Clark,  of  Iowa,  submitted  the  following : 

Eesolved,  That  all  addresses  prepared  for  delivery  at  this 
meeting  and  crowded  out  for  lack  of  opportunity  may  be  filed 
with  the  secretary,  and  thereby  become  a  part  of  the  official  rec- 
ords of  the  proceedings,  and  as  such  entitled  to  publication,  sub- 
ject only  to  the  same  revision  as  addresses  actually  delivered. 
The  resolution  was  adopted  by  unanimous  vote. 

The  chair  then  announced  that  the  final  session  would  be  de- 
voted to  an  open  debate  consisting  of  five-minute  talks.  He 
called  upon  Gen.  T.  S.  Smith,  of  Texas,  who  explained  the  work- 
ings of  the  anti-trust  law  in  his  state. 


T.  S.  SMITH. 

Attorney-General  of  Texas. 

Before  I  came  to  this  conference  I  arrived  at  the  conclusion 
that  in  order  to  remedy  the  wrong  and  protect  the  right  of  the 
people  and  the  corporations,  it  was  necessary  to  have  not  only 
state  legislation,  but  also  national  legislation  along  these  lines. 

I  take  the  position  that  no  corporation  can  do  business  in  an- 

567 


other  state  without  the  consent  of  that  state.  The  Federal  gov- 
ernment cannot  give  a  corporation  the  right  to  do  business  in  a 
sovereign  state  without  the  consent  of  that  state.  It  is  only  by 
comity  between  states  that  a  corporation  chartered  in  one  state 
can  do  business  in  another. 

The  courts  have  decided  that  in  forming  corporations,  they 
can  only  be  formed  by  the  association  of  individuals,  and  that 
one  corporation  cannot  be  formed  by  another  corporation.  So  far 
as  the  Texas  anti-trust  law  is  concerned,  we  do  not  expect  to  con- 
fiscate anybody's  property.  We  say  to  you :  "You  may  come  to 
Texas  and  transact  any  business,  but  it  must  be  a  legal  business 
and  open  to  competition,  and  that  restriction  bears  alike  upon 
individuals,  partnership  and  corporations." 


JAMES  B.  DILL. 

North  American  Trust  Company. 

James  B.  Dill,  of  New  York,  an  authority  on  the  New  Jersey 
law  and  one  of  its  f ramers,  said  in  part : 

In  the  major  part  of  the  sentiment  expressed  here,  I,  as  a 
corporation  lawyer,  agree  with  the  speakers.  I  agree  with  what 
has  been  said  by  the  labor  organizations,  that  that  corporation 
which  fails  to  devote  its  earnings,  first  to  the  increase  of  wages,  will 
eventually  go  to  pieces.  I  cannot  agree  with  Mr.  Cockran  that 
it  makes  not  much  difference  how  much  you  capitalize  a  cor- 
poration, provided  you  make  it  public.  A  corporation  that  issues 
a  certificate,  of  stock  which  says  on  the  face  of  it  that  it  represents 
$100,  when  these  men  know  it  does  not  represent  $100,  misrepre- 
sents the  facts  and  should  not  and  will  not  succeed.  It  makes  a 
difference  to  the  man  who  gets  stock  on  that  certificate,  believing 
he  is  getting  $100  worth.  One  of  the  greatest  evils  of  the  day  is 
overcapitalization. 

I  agree  with  the  proposition  laid  down  by  the  honorable  at- 
torney-general of  the  state  of  Texas,  and  I  say  to  you  that  New 
Jersey  has  been  as  much  misunderstood  in  Texas,  as  Texas  has 
been  misunderstood  in  New  Jersey.  The  secretary  of  state  of 
Xew  Jersey  is  obliged  to  take  and  place  on  file  any  charter  which 
is  properly  presented,  and  it  has  been  the  abuse  of  the  New  Jersey 
law,  and  not  the  use  of  it,  which  has  brought  New  Jersey  into  dis- 
repute. 

In  speaking  of  honest  combinations  for  business,  I  want  to 
point  out  two  dangers  which  are  likely  to  arise :  the  first  is  over- 
sea 


capitalization,  and  in_the  second  place  concealment.  If,  instead 
of  providing  for  the  punishment  of  trusts,  after  being  organized, 
you  will  provide  for  the  punishment  of  the  man  that  promotes 
them,  you  will  kill  the  eggs  in  the  nest  before  they  are  hatched. 

I  would  simply  provide  for  the  English  statute  in  this  country 
— that  any  article  advertising  the  stock  of  a  corporation,  or  any 
prospectus  issued  in  regard  to  the  stock  of  a  corporation,  wherein 
a  sum  of  money  is  mentioned  as  the  subscribed  capital,  shall  truly 
state  the  amount  of  money  actually  paid  and  subscribed  as  capital 
of  the  corporation.  I  would  pass  the  English  law,  which  is  that 
every  holder  of  stock,  and  every  person  through  whose  hands  it 
may  have  passed,  shall  be  deemed  to  hold  that  stock,  subject  to 
the  payment  in  full  in  cash,  unless  the  stock  is  issued,  together 
with  a  contract  showing  all  the  conditions  of  the  issue  of  that 
stock,  which  shall  be  filed  in  every  state  where  the  company  does 
business.  Then  everybody  would  find  out  in  regard  to  it. 

The  effect  of  these  meetings  here,  whatever  resolutions  are 
passed  to-day,  I  believe  will  check  these  dishonest  combinations, 
because  it  will  show  that  men  are  still  living  who  go  about  ready 
to  prick  the  bubbles  of  sham  and  fraud  wherever  they  are  found. 


LAUBENCE  GBONLUND. 

Socialist,  Editorial  Staff  New  York  Journal.     (Since  deceased.) 

We  mean  legitimate,  sound  trusts,  not  fraudulent  con- 
cerns, such,  for  instance,  where  smooth  scoundrels  sell  to  gullible 
people  millions  worth  of  worthless  common  stock,  which  they 
know  will  never  produce  a  dividend.  There  are  plenty  of  means 
and  of  laws  to  take  care  of  this  class.  The  legitimate  trusts  are 
either  associations  of  capital — and  to  these,  department  stores 
belong — or  unions  of  labor.  We  shall  deal  with  both,  though 
it  is  the  former  alone  that  creates  difficulties  for  us. 

Let  us  at  the  start  understand  that  it  is  impossible  to  crush 
out  either  kind  of  trusts.  The  politicians  who  propose  that 
remedy  are  either  supremely  ignorant  or  downright  demagogues. 
In  order  to  find  out  how  to  deal  with  trusts  of  capital,  we  must 
understand  their  origin. 

They  are  not  the  outcome  of  "prohibitive"  or  other  tariffs; 
neither  are  they  the  products  of  railroad  discriminations,  though 
they  often  are  considerably  assisted  thereby.  They  are  economic 
necessities,  due  to  our  complex  civilization.  Our  commercial  and 
industrial  affairs  have  shown  during  the  last  hundred  years  an 
ever  accelerating  tendency  to  larger  schemes,  more  elaborate  or- 

569 


ganization,  more  intricate  machinery.  Our  vast  iron  and  steel 
industry  comes  down  from  the  village  blacksmith,  our  huge 
shoe  factories  from  the  village  cobbler,  our  textile  industry  from 
the  village  hand-loom.  At  one  time  everyone  worked  for  him- 
self. Then  came  small,  then  large  firms,  followed  by  joint-stock 
companies  and  corporations.  Finally,  during  the  last  genera- 
tion, trusts,  more  and  more  extensive  and  intricate  organiza- 
tions, having  for  purpose  to  limit  or  abolish  competition,  since 
it  was  found  to  have  become  highly  injurious  and  unprofitable. 

Thus  it  cannot  be  .too  much  emphasized  that  trusts  are  not 
due  to  any  casual  cause,  not  to  wrong-headedness,  not  to  vicious 
business  principles,  often  even  not  to  voluntary  choice.  A  brewer 
in  England  declared,  "We  are  compelled -to  take  over  the  other 
breweries;  we  don't  want  to,  but  we  are  obliged  to."  It  is  an 
irresistible  tendency,  of  late  appalling  in  its  rapidity,  to  be 
ascribed  to  increase  of  population,  scientific  discoveries  and  me- 
chanical inventions. 

Of  course,  it  cannot  be  stopped.  To  try  to  crush  the  trusts 
would  be  like  the  attempt  by  a  dam  to  stop  the  mighty  Mississippi. 
The  trusts  will  go  on ;  the  various  industries  in  each  line  will  come 
under  a  central  management.  They  will  in  our  country  de- 
velop in  all  directions,  till  finally — some  time  during  the  Twen- 
tieth Century — all  considerable  industries  will  be  under  the  con- 
trol of  trusts,  extending  from  the  Atlantic  to  the  Pacific.  There 
is  absolutely  no  help  for  it. 

Still  we  say,  the  trust  is  not  at  all  a  monster;  it  is  a  phenome- 
non at  which  to  look  fearlessly,  and  to  utilize  for  the  public  wel- 
fare. For  this  purpose  we  must  fully  understand  wherein  the 
dangers  of  the  trust  consist.  It  is  generally  supposed  that  the 
only  interest  the  public  has  is  how  the  trust  affects  wages  and 
prices.  We  think  this  is  a  great  error.  We  do  not  believe  that 
trusts  as  yet  have  seriously  lowered  wages  or  raised  prices.  They 
surely  need  not  do  it.  And  we  know  that  in  many  cases  they 
have  lowered  prices  and  raised  wages. 

But  there  are  two  very  serious  dangers  that  threaten  in  the 
future.  Let  us  assume  that  the  time  has  come  when  every  con- 
siderable industry  has  come  under  one  head,  one  manager,  whose 
sway  will  extend  from  ocean  to  ocean.  What  powers  will  such 
a  chief  not  have,  what  power  especially  for  mischief!  Then  the' 
trust,  indeed,  will  be  capable  of  seriously  affecting  the  public 
welfare;  then  indeed  it  may  lower  wages  and  raise  prices,  if 
it  has  a  mind  to.  Can  a  democracy  like  ours  stand  such  a  state 
of  things?  Can  it  tolerate  in  its  midst  a  handful  of  such  auto- 
crats, whose  aim  is  simply  private  greed,  and  who  do  not  need 

570 


to  care  a  particle  for  social  need?  Already  we  are  now  living 
under  an  absolutism  of  capital  to  which  other  nations  are  stran- 
gers— but  what  will  it  be  then? 

Again,  in  every  trust,  the  owners  virtually  abdicate  all  their 
powers  in  favor  of  the  manager.  Hence,  when  all  our  industries 
have  become  trusts,  capital  will  have  had  its  character  completely 
changed.  Formerly  capitalists  performed  a  highly  important 
function,  that  of  directing  production ;  capital  had  a  social  charac- 
ter, and  was  subject  to  noteworthy  social  obligations,  which  some- 
times were  splendidly  discharged.  But  in  the  future  our  capital- 
holders  will  become  industrially  and  economically  useless,  first 
superfluous,  then  harmful;  they  actually  will  become  rudi- 
mentary organs  in  the  social  organism,  and  capital-holding  will 
become  a  pure  personal  privilege,  subject  to  no  social  obliga- 
tion whatever.  Can  a  democracy  like  ours  stand  this;  will  a 
democracy  stand  it  ?  No.  Such  a  state  of  affairs  will  be  simply 
the  last  step  but  one. 

Even  before  trusts  arose,  when  we  only  had  large  enterprises 
that  controlled  matters  of  vital  interest  to  the  people,  the  pub- 
lic was  forced  to  step  in,  in  order  merely  to  secure  the  rights 
of  consumers.  Public  control  has  again  and  again  been  asserted. 
Grandmother  always  has  had  her  way.  So  with  still  greater  force 
it  will  be  in  the  future.  The  organization  of  trusts  is  admirable; 
it  knocks  into  the  heads  of  all  with  sledge-hammer  blows  the 
patent  truth  that  system  is  better  than  planlessness.  The  ma- 
chinery of  the  trust  is  all  ready  to  the  hands  of  democracy — to 
public  control.  No  one  would  think  of  socializing  an  industry 
that  was  divided  into  a  hundred  thousand  businesses.  But  this  is 
a  national  monopoly.  That  is  why  the  trust  movement  is  an 
irreversible  step  along  the  path  to  universal  co-operation. 

This,  we  say,  is  the  first  answer  to  the  question,  what  to  do 
with  the  trasts:  Look  forward  to  the  future  public  ownership 
and  management  of  their  enterprises,  but  let  this  change  pro- 
ceed slowly.  However,  prepare  for  it,  make  it  the  ideal  of  the 
coming  century,  and  treat  the  trusts  accordingly. 

The  second  thing  to  do,  meanwhile,  is  to  protect  labor  against 
the  trusts.  That  they  in  the  future  may  raise  prices  arbitrarily 
is  bad  enough,  but  that  they  arbitrarily  may  reduce  wages  is 
much  worse.  Oh,  if  the  trusts  would  believe  that  it  is  to  their 
advantage  to  include  their  employes  in  the  benefits  which  they 
achieve,  if  they  would  conclude  to  revive  the  ancient  guilds  on  a 
higher  plane,  then  the  future  might  be  quite  bright — but  they 
are  too  selfish  for  that! 

How,  then,  protect  labor?     For  our  laboring  people  to  help 

571 


our  demagogues  in  attempting  to  crush  the  trust  would  be  sui- 
cidal. They  would  be  the  first  and  only  ones  to  feel  the  blows 
of  such  an  enterprise.  Undoubtedly  our  trades  unions  are  trusts. 
Our  work  people  generally  do  not  know  what  they  owe  to  trades 
unions,  especially  what  they  owe  to  the  old  English  trades  union- 
ists, who  kept  up  their  unions  in  spite  of  parliamentary  terrors. 
That  they  now  enjoy  higher  wages  and  shorter  hours  is  due  to 
the  unions.  Though  strikes  often  are  disastrous  to  the  partici- 
pants, there  never  was  one,  either  won  or  lost,  that  did  not  benefit 
the  working  people  as  a  class. 

It  is  well  that  work  people  are  fast  coming  to  look  upon  the 
workman  as  positively  immoral  who  holds  aloof  from  his  fellows 
and  refuses  to  enter  the  union  of  his  trade.  With  the  arrival 
of  the  trust,  their  ideal  has  become  an  organization,  controlling 
the  entire  labor-force  of  the  country,  nothing  less  than  a  National 
Syndicate  of  Labor.  ,  They  are  right.  Unless  the  labor  trusts 
develop  equally  with  trusts  of  capital,  our  civilization  will  soon 
come  to  a  halt. 

But  the  work  people  cannot  achieve  this  ideal  now  with  their 
own  unaided  efforts — still  less  when  the  trusts  have  gained  their 
giant  strength.  The  State  must  help  them,  and  a  demand  is 
soon  to  be  made  on  our  politicians  which  they  cannot  resist. 
Such  a  demand  has  in  fact  been  made  by  the  well-known  anti- 
socialist  writer,  William  H.  Mallock,  to-wit:  That  the  trades 
unions  be  made  an  "estate  of  the  realm"  by  being  granted  "a 
privileged  status-law."  Our  legislators  must  persuade  every 
workman,  induce  him  by  every  practicable  motive,  to  join  his 
union,  even  to  the  extent  of  granting  to  the  unions  the  privilege 
of,  in  last  resort,  determining  all  labor  questions — thus  making 
the  union  the  representatives  of  the  men  on  an  equal  footing 
with  the  haughtiest  employer.  To  those  who  will  be  horrified 
at  this  suggestion,  we  recommend  the  words  of  Thorold  Eogers : 
"1  would  limit  the  franchise,  parliamentary  and  local,  to  those 
and  those  only  who  enter  into  the  guild  of  labor." 

These  unions,  of  course,  must  be  organized  in  a  thorough  demo- 
cratic fashion,  so  that  every  workman  will  have  a  vote  that  counts 
.as  much  as  that  of  everyone  else.  Moreover,  the  State,  as  the 
representative  of  the  whole  community,  will  rectify  the  many 
serious  blunders  that  trades  unions  in  the  past  have  com- 
mitted, and  which  sometimes  have  made. them  absolutely  anti- 
social institutions,  such  as  the  limitation  of  apprentices  and  for- 
bidding able  workmen  to  do  the  best  they  can. 

This  is  the  way  to  protect  adult  labor.  But  we  must  also 
protect  our  growing-up  youths  against  the  trusts — both  of  capital 

572 


and  labor.  We  must  have  a  new  education  for  our  boys — a  truly 
democratic  education.  Every  phase  of  civilization  has  had  its 
appropriate  education.  A  good  education  under  the  ancient 
regime  was  different  from  a  good  education  during  the  Middle 
Ages,  and  that  again  very  different  from  a  good  education  for  the 
Twentieth  Century.  Our  boys  must  be  trained  into  being  all- 
round  men,  fit  to  take  their  places  in  a  perfect  democracy.  Next, 
our  people  now  are  being  forced — especially  by  the  trusts — to 
take  their  places  according  to  their  capacity,  as  portions  of  a 
great  machinery.  That  is,  we  are  fast  becoming  a  nation  of 
specialists.  Specialization  evidently  is  the  law  that  will  govern 
our  future.  No  man  will  amount  to  anything  unless  he  becomes 
a  specialist  in  something  useful,  and  just  by  becoming  such  a 
specialist  will  he  become  a  valuable  member  of  a  perfect  democ- 
racy. 

We  must  have  such  an  education.  Indeed,  it  has  already  been 
started  under  the  name  of  "The  New  Education."  It  will  make 
our  boys  into  capable  specialists  and  all-round  men.  For  that 
purpose  the  State  must  have  control  of  ten  years  of  the  lives  of 
our  boys,  during  which  first  the  principles  of  the  kindergarten 
and  then  the  principles  of  manual  training  should  govern.  Thus 
the  bo3's  will  be  trained  to  take  their  places  in  the  ranks  of  the 
producers,  and  both  the  trusts  of  capital  and  of  labor  must  be 
made  to  submit. 

Lastly,  we  come  to  the  third  thing  we  can  do  about  the  trusts. 
While  public  control  of  what  is  now  strictly  private  business 
should  be  merely  the  ideal  for  the  next  century,  and  not  be  at- 
tempted until  its  close,  there  is  some  business  that  should  imme- 
diately be  entered  upon.  That  is  the  so-called  public  utilities,  such 
as  municipal  ownership  and  management  of  waterworks,  of  course, 
of  street  transportation  in  every  form,  of  gas  works,  and  electric 
power  works .  These  may  not  yet  be  trusts — only  large  enterprises. 
But  in  Brooklyn  we  find  surface  and  elevated  roads  already 
a  trust,  and  in  Manhattan  they  will  soon  be  that.  It  would  be 
highly  desirable,  and  the  best  thing  for  itself,  if  the  new  democ- 
racy would  in  its  next  national  platform  incorporate  a  plank  de- 
manding municipal  control.  Nothing  would  so  much  convince 
our  people  of  the  blessings  of  public  control,  and  prove  to  them 
that  government  can  do  business  as  well,  and  even  better,  than 
private  parties,  as  such  an  object  lesson. 

But  here  we  have  still  a  suggestion  to  make.  It  is  that  the 
State  should  have  more  to  say  than  now  it  has  in  municipal  en- 
terprises. For  them  to  succeed,  they  must  be  undertaken,  not 
with  a  view  of  giving  labor  employment,  but  with  the  object  of 

573 


furnishing  the  best  and  cheapest  water,  light,  and  transportation. 
This  the  State  can  effect  better  than  the  city.  Hence  the  cry 
of  "local  self-government"  is  wrong.  Capitalists  might  just  as 
properly  demand  that  the  legislature  shall  grant  the  stockhold- 
ers of  a  railroad  "self-government  free  from  State  interference." 
The  city  is  a  creation  of  the  sovereign  State,  and  when  a  charter 
is  granted  it  should  safeguard  State  interests  to  the  same  ex- 
tent that  is  supposed  to  be  done  in  granting  a  charter  for  a  rail- 
road. We  say  that  the  State  should  exercise  oversight  and  have 
final  control,  simply  because  it  at  least  is  one  step  further  re- 
moved from  local  pressure,  and  hence  will  dare  and  be  able  to 
do  things  that  the  local  authorities  will  not  dare  even  attempt. 

Then  there  are  public  utilities  that  come  under  the  jurisdic- 
tion of  the  Nation  which  will  furnish  splendid  opportunities  for 
curbing  the  trusts.  We  should  have  a  National  express  system, 
to  which  the  late  convention  with  Germany  ought  to  give  a  great 
impulse,  a  National  telegraph,  National  banks  of  deposit  (postal 
savings  banks)  and  National  banks  of  loans  from  the  funds  thus 
accumulated,  and  finally  National  control  of  railroads.  We  do 
at  present  advocate  National  ownership  and  management  of  these 
latter ;  this  might  as  yet  be  too  big  a  mouthful  to  digest,  but  Na- 
tional control  of  railroad  fares  and  freight-rates — this  is  per- 
fectly practicable,  and  has  been  several  times  recommended  to 
Congress.  It  would  with  one  stroke  abolish  the  unjust  dis- 
crimination, both  between  localities  and  between  shippers,  which 
the  interstate  commission  has  been  unable  to  effect.  If  trusts 
should  ever  dare  to  raise  prices,  such  a  National  control  of  freight 
rates  will  immediately  bring  them  to  their  senses.  It  is  per- 
fectly practicable,  we  contend.  Through  a  committee  of  Con- 
gress it  is  just  as  easy  to  establish  schedules  of  fares  and  freight 
rates  on  all  our  railroads,  and  to  enforce  them,  as  through  the 
committee  on  ways  and  means  to  establish  schedules  of  duties 
on  imports  and  to  enforce  them,  as  is  now  done. 

This  is  a  practical  way,  and,  we  think,  a  far-seeing  way  to 
utilize  the  trusts  for  the  public  welfare,  while  to  attempt  to  crush 
the  trusts,  we  repeat,  is  simply  the  notion  of  the  demagogues. 

In  conclusion,  we  beg  those  who  want  more  information  in 
this  direction  to  read  an  English  anonymous  book  entitled,  "The 
Social  Horizon,"  and  this  writer's  last  publication,  "The  New 
Economy." 


574 


CLEM  STUDEBAKER, 

Manufacturer,  South  Bend,  Ind. 

Within  certain  reasonable  limits  the  combination  of  agencies 
for  the  production  of  a  given  article  decreases  the  cost  of  produc- 
tion. Such  combinations  enable  the  use  of  the  latest  improved 
machinery,  and  the  adoption  of  general  facilities  to  expedite  the 
progress  of  work  usually  impossible  if  the  manufacture  is  carried 
on  with  limited  capital,  or  with  small  productive  capacity.  Fur- 
ther, it  is  well  known  that  managerial  assistance  usually  costs  little 
more  for  a  business  of  great  magnitude  than  for  one  the  output  of 
which  is  small.  On  the  other  hand,  however,  whenever  a  busi- 
lu-ss  becomes  so  large  that  its  oversight  is  impossible  by  one 
executive  head,  then  it  is  often  ihe  case  that  economies  are  less 
likely  to  be  successfully  practiced.  Such  I  imagine  would  be 
the  case  if  it  were  undertaken  to  operate  plants  widely  separated 
throughout  the  country.  -  As  to  whether  the  decrease  of  cost  of 
production  ought  to  be  beneficial  to  society,  or  the  reverse,  I 
think  this  answers  itself  in  the  asking.  Morally  considered,  so- 
ciety ought  to  be  benefited  by  every  honest  and  proper  improve- 
ment of  conditions  in  the  material  world. 

To  what  extent  a  decrease  of  the  cost  of  production  will  profit 
the  consumer  will  depend  largely  on  the  necessity  which  con- 
strains the  purchaser  to  share  with  him  his  saving.  If  the  com- 
bination in  question  were  such  as  to  utterly  preclude  competi- 
tion, the  benefit  which  would  accrue  to  the  consumer  by  a  saving 
effected  by  the  producer  would  quite  possibly  be  inappreciable. 
Most  producers  under  such  circumstances  would  be  quite  likely 
to  arrogate  to  themselves  credit  for  the  saving  effected,  and  would 
consider  that  a  division  of  the  benefits  under  such  circumstances 
would  come  under  the  head  of  philanthropy  or  benevolences 
rather  than  matter  of  fact  business. 

I  would  regard  a  general  combination  of  all  of  the  manufac- 
turing plants  for  the  production  of  any  given  article  of  manufac- 
ture as  likely  to  be  to  some  extent  disadvantageous  to  the  wage 
earner.  The  operation  of  some  factories  .would  perhaps  be  dis- 
continued in  favor  of  others  more  eligibly  situated,  and  to  the 
degree  that  concentration  of  forces  would  increase  productive- 
ness, there  would  be  a  correspondingly  diminished  demand  for 
laborers.  But  this,  of  course,  happens  whenever  improved  ma- 
chinery is  introduced,  or  whenever  there  is  a  readjustment  of 
production  occasioned  by  a  change  in  conditions  affecting  such 
proatK-tion. 

I  do  not  imagine  that  combination  among  industrial  enter- 

575 


prises  will  very  seriously  affect  middlemen.  In  some  cases  com- 
mercial traveling  men  could  be  dispensed  with,  but  the  day  when 
the  public  can  be  conveniently  supplied  without  the  intervention 
of  the  merchant,  is  a  long  ways  off. 

No  true  monopoly  is  possible  in  this  country  except  that  en- 
joyed by  virtue  of  a  patent  granted  by  the  United  States.  If 
those  who  undertake  to  inaugurate  trusts  had  a  monopoly  of  the 
trust  business  there  would  be  cause  for  alarm.  But  any  one  can 
go  into  the  trust  or  combination  business  who  is  able  to  find 
others  who  will  join  him.  Herein  is  the  safety  of  society.  Com- 
binations of  capital  build  railroads  and  decrease  the  cost  of  travel 
and  transportation.  Some  part  of  that  saving  they  keep  as  profit, 
but  whenever  they  undertake  to  keep  «o  much  of  it  from  the  pub- 
lic as  to  give  them  unusually  large  returns  on  their  capital,  a  rival 
road  springs  up,  and  down  goes  the  cost  to  the  consumer.  Trusts 
have  undertaken  to  enfold  producers  so  as  to  limit  competition, 
but  in  vain.  No  sooner  have  they  gathered  into  the  fold  all  in 
sight  tlian  up  springs  another.  And  this  will  continue  to  be  the 
case  so  long  as  there  are  profits  made  which  allure  outside  capital, 
and  outside  capital  is  left  free  to  take  a  hand  in.  Sugar  refining, 
the  manufacture  of  tobacco,  etc.,  are  cases  in  point.  Whenever 
these  great  companies  give  evidence  of  making  large  profits,  some 
powerful  rival  comes  into  the  field,  and  competition  proceeds  to 
regulate  prices  on  a  lower  plane. 

Combination  within  reasonable  lines  is  likely  to  be  of  benefit. 
This  is  already  evident  in  the  fact  that  our  products  in  iron  and 
steel  are  coming  into  large  demand  throughout  the  world,  even  in 
England  herself. 

The  best  service  which  our  legislators  can  render  the  country, 
when  considering  the  subject  of  our  productive  agencies,  is  to 
insure  enterprise  and  home  capital  a  fair  field  and  no  favor.  It  is 
folly  to  talk  of  restraining  legitimate  combinations.  There  is 
scarce  a  corner  grocery  in  the  land  that  is  not  witness  to  a  com- 
bination of  money  and  brains,  a  combination  for  the  mutual 
benefit  of  the  combined.  The  whole  country  is  built  up  of  com- 
binations. They  exist  alike  in  society,  in  government  and  in 
business,  and  it  is  as  futile  and  senseless  to  talk  about  restrictions 
in  this  particular  as  it  would  be  to  undertake  to  make  Niagara 
flow  up  stream  into  Lake  Erie. 

As  manufacturers  we  feel  no  concern  about  combinations  of 
capital  in  our  line  of  business.  It  is  the  brain  power  of  a  competi- 
tor, rather  than  his  capital  in  money,  which  makes  him  formid- 
able in  the  struggle. 

576 


S.  A.  MARTIN. 

President  Wilson  College. 

The  determining  question  in  all  of  life's  activities  is,  will  it 
pay?  Will  the  outcome  of  the  proposed  enterprise  compensate 
for  the  capital,  the  time  and  labor  and  whatever  else  must  be 
invested,  risked,  or  used  in  the  work?  Is  there  the  prospect  of  a 
satisfactory  quid  pro  quo  ?  By  this  the  enterprises  of  the  business 
world  are  judged. 

I  am  not  here  to  criticise  this  rule  of  business.  I  do  not  ques- 
tion its  validity  if  properly  applied.  But  I  venture  to  suggest  that 
commercial  and  industrial  methods  cannot  be  wisely  judged  by 
the  results  which  may  appear  only  on  the  ledger.  Still  less  can 
they  be  judged  by  such  reports  as  cover  only  a  year,  or  even 
twenty  years. 

Many  of  the  forces  which  make  for  public  weal  or  public  woe 
require  generations  to  effect  their  purposes.  Some  influences  of 
sturdiest  growth  and  richest  fruitage  ripen  only  after  centuries 
of  silent  growth.  The  development  of  national  character,  the 
formation  of  those  attributes  which  make  a  people  great,  is  not 
the  work  of  years  or  decades,  but  of  generations. 

In  estimating  the  effects  of  such  a  movement  as  this  which 
we  are  now  discussing  we  do  but  belittle  and  obscure  the  subject 
when  we  speak  of  it  as  though  it  could  be  stated  in  terms  of  dol- 
lars and  cents,  or  in  any  results  of  mere  material  prosperity.  The 
prevalence  of  an  industrial  system  dominated  by  great  aggrega- 
tions of  capital  and  great  federations  of  labor  might  result  in 
such  prosperity  of  business  as  the  world  has  never  seen,  and  yet 
prove  an  unmeasurable  curse.  It  certainly  will  do  so,  if  it  in 
any  considerable  degree  debauch  the  conscience  or  degrade  our 
manhood. 

"Ill  fares  the  state,  to  hastening  ills  a  prey, 
Where  wealth  accumulates  and  men  decay. ' 

Now  it  is  not  fair  to  presume  that  such  will  be  the  tendency 
of  such  a  system;  but  it  is  important  to  inquire  with  great  care 
what  effect  it  will  have  on  the  average  manhood  of  our  people. 

It  is  strongly  urged  that  on  the  whole  the  influence  of  such 
combinations,  such  fuller  organization  of  our  industries,  will  be 
favorable  to  the  development  of  a  higher,  stronger,  purer  type  of 
character — that  the  average  manhood  will  be  elevated.  In  sup- 
port of  this  we  have  been  offered  some  considerations  of  impor- 
tance, and  we  would  gladly  be  convinced.  But  for  myself  I  can- 
not without  most  serious  apprehension  see  the  small  proprietor 

577 


eliminated,  the  freedom  of  his  will  abridged,  his  conscience  hand- 
icapped, and  the  sphere  of  his  thought  and  actions  circumscrihed 
to  very  narrow  limits.  I  cannot  see  in  all  that  has  been  offered, 
nor  does  the  range  of  my  imagination  find  any  compensation  ade- 
quate for  the  surrender  of  so  large  a  portion  of  the  exercises  which 
in  all  the  ages  we  have  depended  on  to  make  men  manly. 

We  cannot  forget  that  in  all  our  history,  the  small  proprietor, 
the  independent  workman,  toiling  with  his  own  tools  in  his  own 
shop,  or  driving  his  own  team  to  till  the  farm  he  owns — that  these 
men  have  been  and  are  to-day  the  ultimate  dependence  of  our 
civilization.  In  every  social  revolution  in  historic  times  this  class 
has  been  the  bulwark  of  the  state,  the  conservator  of  justice,  the 
savior  of  social  order.  Can  we  with  safety  eliminate  this  class, 
or  even  diminish  its  number  or  its  power? 

It  is  UDged  by  some  that  trusts  will  not  drive  out  the  small 
proprietor,  that  there  will  always  be  a  field  for  competition,  but 
we  doubt  it.  Even  though  our  laws  be  strictly  just,  and  our 
courts  maintain  their  ermine  spotless,  which  I  trust  they  will 
do,  though  it  must  be  in  face  of  greater  temptation  than  ever 
before.  Still,  the  natural  advantage  of  great  combinations  of 
wealth  and  influence  is  too  great  to  be  rivaled  in  an  open  field. 
The  earthen  pot  may  sail  with  the  brazen  pot  on  an  open  sea  and 
with  equal  winds,  but  when  the  storm  dashes  them  together,  it 
is  easy  to  predict  which  will  go  to  the  bottom. 

But  my  chief  concern  is  not  for  his  business,  but  his  char- 
acter. Can  the  small  proprietor  lose  his  independence  in  business 
and  not  lose  his  integrity  of  character?  It  certainly  is  not  impos- 
sible, but  it  certainly  is  extremely  difficult. 

Few  men,  if  any,  feel  the  same  sense  of  responsibility  for  acts 
committed  as  an  agent  of  a  corporation  as  they  feel  for  acts  which 
they  alone  direct.  Clerks  and  officers  will  share  in  fraud  and 
rank  injustice  which  they  would  not  stand  sponsor  for  before  the 
world,  and  little  at  a  time  men  are  seduced  from  their  high  sense 
of  honor  and  integrity  because  each  small  increment  in  the  down- 
ward course  is  laid  in  the  balance  against  the  loss  of  their  position. 

Each  point  seems  too  small  to  fight  for,  but  as  one  after  an- 
other is  given  up,  the  conscience  is  corrupted  and  the  manhood 
of  the  man  enslaved. 

What  I  have  said  is  but  an  illustration  of  the  evils  which  I 
fear  from  this  intense  and  universal  tendency  to  greater  and  still 
greater  aggregation,  combination  and  insatiate  eagerness  for  or- 
ganization. Yet  I  do  not  stand  here  to  oppose  it.  I  do  not  think 
it  any  more  worth  while  to  oppose  the  evolution  of  our  business 
life  by  argument  than  it  would  be  to  rail  at  the  precession  of  the 

578 


equinoxes,  or  quarrel  with  the  seasons  of  the  year.  The  harm, 
it'  harm  it  be,  is  done;  charters  of  the  most  liberal  nature  have 
been  granted  by  the  score,  and  we  must  face  conditions  which 
exist.  I  know  of  no  power  on  earth  that  can  prevent  men  from 
openly  or  secretly  combining  to  get  the  best  prices  that  the 
market  will  afford  for  what  they  have  to  sell,  whether  that  be. 
labor  or  the  product  of  labor. 

The  state  can  withdraw  the  protection  of  the  tariff,  and  the 
state  will  no  doubt  do  so.  The  state  can  readjust  taxation,  so 
that  great  corporations  shall  have  their  fair  share  of  the  public 
burdens,  which  I  think  they  do  not  now.  But  trusts  are  here  and 
here  to  stay  as  the  result  of  the  inevitable  laws  of  industrial 
development. 

For  us  the  duty  is  to  recognize  the  facts,  face  the  conditions 
of  the  age  we  live  in;  meet  the  evils  of  the  present  hour  as  they 
rise,  protect  the  individual  from  the  greed  of  wealth  and  the 
selfishness  of  labor,  to  educate  the  conscience,  and  devise  new 
channels  for  individual  enterprise.  Thus  with  the  unfaltering 
faith  in  the  fair-minded  honesty  of  the  American  people  go  on 
to  occupy  the  fields  of  opportunity  which  open  so  abundantly 
before  us  in  this  age  and  country. 


WILLIAM  DUDLEY  FOULKE. 

William  Dudley  Foulke  took  issue  with  some  of  the  remarks 
made  by  Col.  Bryan,  saying  in  part : 

It  seems  to  me  that  the  plan  suggested  by  Mr.  Bryan  for  the 
annihilation  of  trusts  will  be  found  entirely  inadequate  for  that 
purpose.  He  proposes  that  no  corporation  organized  in  one  state 
shall  be  allowed  to  do  business  in  any  other  state  until  a  license 
shall  be  first  secured,  and  that  this  license  shall  only  be  given 
upon  proof  that  the  corporation  is  not  a  monopoly,  and  is  not 
attempting  to  become  a  monopoly. 

Very  few  corporations  will  be  prevented  from  doing  business 
by  such  a  provision.  Every  company  which  now  exists  can  point 
to  some  competitor.  Even  the  Sugar  Trust,  which  once  con- 
trolled 98  per  cent  of  the  business  in  that  line  of  industry  had 
2  per  cent  of  competition.  The  other  trusts  have  a  far  greater 
proportion.  Mr.  Bryan  himself  said  that  we  had  at  present  no 
illustration  of  a  complete  monopoly.  The  corporations  then  can 
easily  make  the  proof  that  they  have  no  monopoly,  and  it  cer- 
tainly will  not  be  'hard  for  their  officers  to  swear  that  they  are 

579 


not  attempting  to  establish  monopolies.  It  will  be  very  difficult, 
on  the  other  hand,  to  show  that  these  statements  are  untrue. 

But  even  if  a  license  should  be  refused,  even  if  all  the  states 
should  prohibit  foreign  corporations  from  doing  business  within 
their  borders,  this  would  not  "annihilate"  the  trusts.  They 
might  sell  their  goods  to  a  middle-man,  who,  if  he  should  become 
the  owner  of  property  lawfully  manufactured  in  his  own  state, 
could  not  under  our  federal  constitution  be  excluded  from  selling 
it  in  other  states.  Even  if  you  were  to  provide  that  a  monopoly 
should  not  recover  the  price  of  its  goods,  still  you  could  not  an- 
nihilate the  trusts.  It  would  be  important  for  buyers  to  preserve 
their  credit,  and  they  would  hardly  dare  to  take  advantage  of  such 
a  law.  Or  if  it  were  found  necessary,  the  trusts  would  sell  for 
cash.  So  long  as  they  could  sell  lower  than  any  one  else,  they 
could  still  keep  their  present  advantages. 

The  states  have  been  passing  laws  for  the  abolition  of  trusts 
for  more  than  ten  years.  As  early  as  1894  twenty- two  states  had 
enacted  statutes  for  this  purpose,  yet  all  these  laws  as  well  as  the 
federal  act  were  found  to  be  totally  ineffective.  The  Supreme 
Court  of  the  United  States  in  the  Knight  case — the  case  of  the 
Sugar  Trust — decided  in  regard  to  the  Sherman  anti-trust  law 
that  it  applied  only  to  the  agencies  controlling  transportation, 
and  not  to  manufacturing  industries  at  all,  even  though  the  prod- 
ucts of  these  industries  were  sold  in  many  states.  The  Court 
said  that  commerce  merely  "served  manufacture  to  fulfill  its 
functions,"  and  indicated  that  the  Constitution  had  given  Con- 
gress no  power  over  manufacturing  trusts,  and  that  the  Sherman 
act  had  not  prohibited  them.  To  do  this,  therefore,  an  amend- 
ment to  the  Constitution  will  be  required. 

Now  an  amendment  to  the  Constitution  has  to  be  adopted  by 
two-thirds  of  both  houses  of  Congress  and  ratified  by  three- 
fourths  of  all  the  states.  It  would  be  very  hard  to  secure  such 
an  amendment.  And  if  we  are  .to  have  federal  legislation  and 
federal  courts  controlling  our  manufacturing  industries,  indus- 
tries which  now  affect  nearly  all  the  agencies  by  which  we  live 
and  move  and  have  our  being,  it  is  evident  that  state  lines  will 
become  very  shadowy  in  the  presence  of  these  great  industrial 
forces  of  a  consolidated  republic. 

My  friends,  are  we  ready  for  that  change? 

Judge  Haiian  pointed  out  in  his  dissenting  opinion  in  the 
Knight  case  the  necessity  for  federal  control  if  the  trusts  were 
to  be  overthrown.  "If  one  great  combination,"  he  asked,  "should 
control  the  sugar  industry,  another  the  flour  mills,  another  the 
elevator  business,  another  the  cotton  business,  and  so  on,  what 

580 


power  would  be  adequate  to  deal  with  such  organizations  except 
the  federal  power?" 

But  it  seems  to  me  that  even  if  all  corporations  could  be 
destroyed  (which  I  think  is  impossible)  we  could  not  "even  then 
abolish  the  trusts.  If  the  Standard  Oil  Company  were  dissolved 
the  men  who  control  it  might  with  their  vast  capital  organize  a 
partnership  to  carry  on  the  same  business  in  the  same  way,  or 
if  that  would  involve  too  great  a  risk,  or,  if  partnerships,  too, 
should  be  made  illegal,  what  is  there  to  prevent  the  stockholders 
of  the  great  companies  from  loaning  the  value  of  their  stock  to 
some  manager,  agreeing  to  receive  in  lieu  of  interest  a  propor- 
tionate part  of  the  profits  of  the  joint  adventure?  If  you  abolish 
one  form  of  combination  another  will  take  its  place.  When  you 
propose  to  annihilate  trusts  you  are  proposing  to  destroy  the  ten- 
dency of  men  to  unite  and  organize  their  business,  and  it  is  just 
as  impossible  to  destroy  that  as  it  is  to  annihilate  the  law  of 
gravitation. 

Mr.  Gaines :  Does  the  speaker  desire  to  amend  the  Constitu- 
tion and  give  the  federal  government  exclusive  power?  Or  does 
he  want  the  states  to  have  the  power? 

Mr.  Foulke:  I  believe  the  power  to  annihilate  the  trusts 
cannot  be  given  at  all.  When  it  comes  to  regulation,  let  the 
federal  government  exercise  the  powers  it  has  and  let  the  state 
governments  exercise  the  powers  they  have  to-day.  Although 
we  cannot  annihilate  the  trusts,  we  may  regulate  and  restrain 
their  injurious  influence.  You  cannot  stop  the  Mississippi  by  a 
dam,  but  you  may  conduct  it  into  safer  and  more  convenient 
channels. 

Something  may  be  done  by  tariff  legislation,  and  I  believe 
that  many  even  of  those  who  are  in  favor  of  the  protective  system 
would  be  willing  to  see  our  tariff  laws  modified  so  as  to  prevent 
any  industry  which  has  thereby  acquired  a  monopoly  from  using 
that  monopoly  for  the  purpose  of  exacting  exorbitant  prices. 

But  the  greater  part  of  the  trusts  do  not  owe  their  existence 
to  the  tariff.  The  Standard  Oil  Company  did  not  acquire  its 
power  through  legislation  of  this  kind.  Trusts  exist  even  in  free 
trade  England,  and  if  you  change  the  tariff  laws  you  will  hardly 
do  more  than  scratch  the  surface  of  the  great  question  involved 
in  these  vast  combinations. 

The  law  may  do  something  also  to  prevent  unjust  discrimina- 
tions. I  think  that  would  be  wise  not  only  in  respect  to  railroad 
companies,  but  in  respect  to  all  corporations. 

Mr.  Bryan  spoke  of  the  evils  of  over-capitalization.  I  agree 
that  that  ought  to  be  prevented  if  possible,  but  even  here  we 


shall  find  difficulties.  A  government  expert  might  be  required 
to  make  the  valuations,  not  only  of  the  actual  property  of  each 
company,  but  also  of  its  good  will.  Often  the  good  will  of  a 
business  costs  a  great  deal,  and  has  a  substantial  value  apart  from 
tangible  property.  For  instance,  the  circulation  of  a  newspaper 
is  perhaps  the  greater  part  of  its  capital.  Mr.  Bryan  said  that  a 
dry  goods  merchant  could  not  inflate  the  value  of  his  goods.  Yet 
there  are  many  dry  goods  merchants  who  would  not  sell  their 
business  for  a  good  deal  more  than  their  stock  is  worth.  If  you 
want  to  prevent  over-capitalization  you  must  have  all  these  things 
estimated  periodically  by  some  competent  and  disinterested  au- 
thority. That  will  be  no  easy  task. 

The  requirement  of  publicity  will  do  a  great  deal.  In  this 
respect  the  provisions  of  the  national  banking  act  point  out  the 
way  for  us  to  follow.  But  the  information  called  for  ought  to  be 
a  great  deal  fuller  than  that  now  required  of  national  banks. 
Periodical  statements  and  examinations  should  be  made  not  only 
of  stock,  salaries,  property,  dividends,  wages,  prices  of  materials 
bought  and  goods  sold,  but  of  all  other  matters  which  tend  to 
throw  light  upon  the  condition  of  the  corporation  and  its  man- 
agement of  the  particular  industry  involved.  This  publicity  will 
restrain  many  abuses,  and  it  will  throw  light  upon  the  question 
as  to  what  further  legislation  is  needed. 

The  trusts  cannot  be  annihilated,  but  as  to  their  regulation,  I 
have' no  doubt  that  our  people  will  at  last  find  remedies  which 
shall  be  sufficient  to  counteract  many  of  the  injurious  conse- 
quences of  monopoly. 


WILLIAM  JENNINGS  BEYAN. 

There  were  loud  calls  upon  Col.  Bryan  to  respond  to  Mr. 
Foulke,  and  he  did  so,  saying: 

I  would  not  occupy  the  time  again  but  for  the  fact  that  the 
gentleman  from  Indiana  (Mr.  Foulke)  has  referred  to  a  plan 
which  I  suggested,  and  I  am  afraid  that  he  does  not  fully  under- 
stand it. 

Just  a  word  in  regard  to  the  plan.  I  want  to  repeat  that  it 
was  not  presented  as  the  only  plan,  nor  is  it  necessarily  the  best 
plan.  It  is  simply  a  plan.  I  was  sorry  that,  when  the  gentleman 
got  through  destroying  this  plan,  he  did  not  suggest  a  better  one. 
Political  agnosticism  is  of  no  great  benefit  to  the  public.  Not  to 

582 


know  what  to  do  is  often  a  convenient  position  to  occupy,  but  it 
contributes  very  little  to  the  settlement  of  a  question. 

My. plan  is  this :  First,  that  the  state  has,  or  should  have,  the 
right  to  create  whatever  private  corporations  the  people  of  the 
state  desire. 

Second,  that  the  state  has,  or  should  have,  the  right  to  impose 
such  limitations  upon  an  outside  corporation  as  the  people  of  the 
state  may  think  necessary  for  their  oWn  protection.  That  pro- 
tects the  right  of  the  people  of  the  state  to  say,  first,  what  cor- 
porations they  shall  organize  in  their  state,  and  second,  what 
corporations  they  shall  permit  to  come  from  other  states  to  do 
business  in  their  state. 

Third,  that  the  federal  government  has,  or  should  have,  the 
right  to  impose  such  restrictions  as  Congress  may  think  neces- 
sary upon  any  corporation  which  does  business  outside  of  the 
state  in  which  it  is  organized. 

In  other  words,  I  would  preserve  to  the  people  of  the  state 
all  the  rights  that  they  now  have,  and  at  the  same  time  have 
Congress  exercise  a  concurrent  remedy  to  supplement  the  state 
remedy.  When  the  federal  government  licenses  a  corporation  to 
do  business  outside  of  the  state  in  which  it  was  organized,  it 
merely  permits  it  to  do  business  in  any  state,  under  the  condi- 
tions imposed  by  that  state,  in  addition  to  the  conditions  imposed 
by  the  federal  government.  I  would  not  take  away  from  the 
people  of  the  state,  any  right  now  existing,  but  I  would  have  the 
federal  government  and  the  state  government  exercise  the  powers 
that  may  be  necessary  to  annihilate  every  monopoly. 

I  do  not  agree  with  the  gentleman  that  you  cannot  annihilate 
a  monopoly.  I  believe  it  is  possible  to  do  so.  While  the  gentle- 
man was  speaking  I  could  not  help  thinking  of  the  lines  of  a 
song.  While  he  was  destroying  every  remedy  suggested,  and  yet 
presenting  no  other,  I  thought  of  the  lines: 

"Plunged  in  a  gulf  of  deep  despair, 
Ye  wretched  sinners  lie." 

Now,  it  is  a  great  deal  easier  to  find  fault  with  a  remedy  pro- 
posed than  to  propose  a  remedy  which  is  faultless.  Macaulay— 
I  think  he  is  the  author  of  the  remark — has  said  that  if  any 
money  was  to  be  made  by  disputing  the  law  of  gravitation,  able 
men  could  be  found  to  write  articles  against  the  truth  of  that 
law.  I  have  no  doubt  that  any  remedy  that  is  proposed  will  be 
assaulted.  But  those  who  believe  that  the  trusts  must  go  will 
accept  the  best  remedy  they  can  find,  try  it  and  then  accept  a 

583 


better  one,  if  a  better  one  is  proposed,  and  keep  on  trying  until 
the  people  are  protected. 

Now,  this  is  a  conference.  We  have  not  met  here  to  destroy 
the  trusts.  Every  law  for  the  annihilation  of  the  trusts  must  be 
secured  through  political  action.  We  are  here  to  discuss  these 
questions.  We  are  here  to  contribute  what  we  can  and  to  hear 
what  others  have  to  say.  We  are  here  to  consider  the  various 
remedies  proposed.  I  am  not  sure  the  remedy  which  I  propose 
is  unconstitutional.  I  am  not  sure  that  the  Constitution  would 
prohibit  such  an  act  of  Congress  as  I  suggest.  Suppose  that  Con- 
gress should  say  that  whenever  a  corporation  wants  to  do  business 
outside  of  the  state  it  must  apply  to  and  receive  from  some  body, 
created  by  Congress  for  the  purpose,  a  license  to  do  business. 
Suppose  the  law  should  provide  three  conditions  upon  which  the 
license  could  be  issued. 

1.  That  the  evidence  should  show  that  there  is  no  water  in 
the  stock. 

2.  That  the  evidence  should  show  that  the  corporation  has 
not  attempted  in  the  past,  and  is  not  now  attempting,  to  monopo- 
lize any  branch  of  industry  or  any  article  of  merchandise ;  and 

3.  Providing  for  that  publicity  which  everybody  has  spoken 
of  and  about  which  everybody  agrees. 

Suppose  that  is  done.  Who  is  here  to  say  that  such  a  law 
would  be  unconstitutional  ?  The  Supreme  Court  in  deciding  the 
Knight  case,  did  not  say  that  a  broader  law  than  the  present  one 
would  be  unconstitutional.  It  is  true  there  are  things  in  the 
decision  which  suggest  that,  but  until  that  question  is  presented 
to  the  court,  you  cannot  say  that  the  court  has  passed  upon  it. 
It  is  also  true  that  Justice  Harlan,  in  his  dissenting  opinion, 
assumed  that  a  broader  law  would  be  held  unconstitutional,  but 
no  one  has  a  right  to  say  that  if  such  a  law  as  I  suggest  were 
passed  and  reviewed  by  the  Supreme  Court,  it  would  be  held 
unconstitutional.  But,  suppose  the  law  is  passed  and  held  un- 
constitutional; then  we  can  amend  the  Constitution. 

The  gentleman  suggests  that  it  is  a  difficult  thing  to  get  two- 
thirds  of  both  houses  and  three-fourths  of  the  states  to  favor 
such  an  amendment.  That  is  true;  it  is  a  difficult  thing,  but  if 
the  people  want  to  destroy  the  trusts  they  can  control  two-thirds 
of  both  houses  and  three-fourths  of  the  states.  But  what  is  the 
alternative?  Sit  down  and  do  nothing?  Allow  them  to  trample 
upon  you,  ride  rough-shod  over  you,  and  then  thank  God  that 
you  still  have  some  life  left?  The  people  are  told  to  be  con- 
tented, but  I  think  contentment  may  be  carried  too  far. 

I  heard  of  a  man  once  who  had  been  taught  to  be  contented 

584 


with  his  lot,  and  finally  became  very  poor  and  traded  off  his  coat 
for  a  loaf  of  bread.  Before  he  had  a  chance  to  eat  the  bread 
a  dog  came  along  and  snatched  it  away  from  him.  He  felt  a  little 
indignant  at  first,  but  finally  that  feeling  of  contentment  came 
back  to  him,  and  as  he  watched  the  dog  turn  around  a  corner  in 
the  road  carrying  the  bread  away,  he  said:  "Well,  thank  God, 
I  still  have  my  appetite  left." 

Now,  there  are  some  people  who  seem  to  think  we  ought  to  be 
satisfied  with  anything.  My  friends,  the  American  people  are 
entitled  to  the  best  that  there  is.  The  American  people  are 
entitled  to  the  best  system  on  every  subject.  I  believe  when  these 
questions  are  presented  to  the  American  people  they  will  select 
and  secure  the  best  system.  I  do  not  believe  it  necessary  for 
us  to  sit  down  quietly  and  permit  a  great  aggregation  of  wealth 
to  strangle  every  competitor,  i  do  not  believe  that  it  is  in  ac- 
cordance with  our  dignity  as  a  people,  or  in  accordance  with  the 
rights  of  the  people  to  say,  that  because  a  great  corporation  is 
organized,  therefore,  it  should  be  permitted  to  go  into  the  field 
of  a  rival,  undersell  it  until  it  bankrupts  it,  raising  the  money  by 
higher  prices  somewhere  else.  I  don't  think  it  necessary  for  us 
to  do  that. 

I  have  only  suggested  a  plan.  It  may  not  be  the  best  plan. 
If  you  have  anything  better,  propose  it.  If  there  is  any  amend- 
ment that  you  can  think  of  that  will  improve  it,  suggest  it.  I 
am  anxious  to  apply  a  remedy. 

Let  me  suggest  one  other  thing  that  I  believe  will  be  a  step 
in  the  right  direction.  The  great  trouble  has  been  that,  while 
our  platforms  denounce  corporations,  corporations  control  the 
elections  and  place  the  men  who  are  elected  to  enforce  the  law 
under  obligations  to  them. 

Let  me  propose  a  remedy — not  a  remedy,  but  a  step  in  the 
right  direction.  Let  the  laws,  state  and  national,  make  it  a  penal 
offense  for  any  corporation  to  contribute  to  the  campaign  fund 
of  any  political  party.  Nebraska  has  such  a  law,  passed  two  years 
ago.  Tennessee  has  such  a  law,  passed  two  years  ago.  Such  a 
measure  was  introduced  in  the  state  of  New  York,  but  so  far  it 
has  not  become  a  law. 

You  remember  the  testimony  taken  before  a  senate  com- 
mittee a  few  years  ago,  when  the  head  of  the  sugar  trust  testified 
that  the  sugar  trust  made  it  its  business  to  contribute  to  cam- 
paign funds,  and  when  asked  to  which  one  it  contributed,  replied 
that  it  depended  upon  circumstances. 

"To  which  fund  do  you  contribute  in  Massachusetts?"  was 
asked.  "To  the  Republican  fund."  "To  which  fund  in  New 

586 


York?"  "To  the  Democratic  fund/'  "To  which  fund  in  New 
Jersey?"  and  the  man  replied,  "Well,  I  will  have  to  look  at  the 
books,  that  is  a  doubtful  state." 

Now,  that  is  almost  a  literal  reproduction  of  the  testimony 
of  one  great  corporation  on  the  subject  of  campaign  contribution. 
I  don't  mean  to  say  that  that  remedy  will  be  a  complete  one,  but 
I  believe  that  when  you  prevent  a  corporation  from  contributing 
to  campaign  funds  you  will  make  it  easier  to  secure  remedial 
legislation,  because  some  corporations  are  compelled  to  con- 
tribute; they  are  blackmailed  into  contributions,  and  such  a  law 
would  protect  a  corporation  that  did  not  want  to  contribute,  and 
also  prevent  a  corporation  from  contributing  that  did  want  to 
contribute. 

If  the  people  are  in  earnest  they  can  destroy  monopoly,  and 
you  never  can  do  anything  in  this  country  until  the  people  are  in 
earnest.  When  the  American  people  understand  what  the  mo- 
nopoly question  means,  I  believe  there  will  be  no  power,  political, 
financial  or  otherwise,  to  prevent  the  people  from  taking  pos- 
session of  every  branch  of  government,  from  president  to  the 
supreme  court,  and  making  the  government  responsive  to  the 
people's  will. 

As  Col.  Bryan  finished  Mr.  Cockran  was  called  for. 


W.  BOURKE  COCKRAN. 

Just  one  moment  while  I  express  my  complete  concurrence  in 
much  that  Mr.  Bryan  has  said,  and  my  great  satisfaction  that  by 
taking  the  platform  he  has  largely  helped  restore  this  debate  to  its 
natural  limits. 

I  agree  with  Mr.  Bryan  that  if  there  be  an  oppresssive  monop- 
oly in  existence  it  should  be  suppressed,  whatever  may  be  the 
measures  necessary  to  overthrow  it.  No  constitutional  limitation, 
no  abstract  theory  of  government,  no  mere  human  device,  can  de- 
prive this  people  of  the  power  to  redress  a  wrong,  when  the  exist- 
ence of  that  wrong  is  clearly  established. 

The  first  question  to  which  I  think  the  attention  of  this  con- 
ference should  be  directed  is  whether  an  oppressive  monopoly 
exists,  and  if  so,  where  it  is.  Before  undertaking  to  discuss  rem- 
.edies  we  should  make  sure  chat  evils  exist.  If  their  existence  be 
established,  the  first  step  toward  their  redress  is  to  define  them  in 
terms  which  everybody  can  understand.  To  call  an  industrial  or- 
ganization— a  combine — a  hydra-headed  monster — or  even  an 

586 


octopus — does  not  cast  any  light  upon  what  it  is,  or  illumine  my 
pathway  in  attempting  to  deal  with  it. 

1  said  yesterday  that  1  have  been  suffering  through  every 
portion  of  this  discussion  from  that  dangerous  intoxication  of 
phrases  which  seems  sufficient  to  maintain  magnificent  periods, 
but  leaves  us  when  all  is  over  in  such  a  state  of  mental  bewilder- 
ment that  we  don't  quite  know  what  we  have  been  talking  about. 
1  can  understand  how  these  phrases  often  produce  great  effect. 
Nothing  frightens  people  so  much  as  incomprehensible  noises. 
Let  an  unaccountable  noise  be  heard  here  now,  and  in  a  second 
we  would  all  be  trying  to  escape  by  the  windows.  Men  may  be  put 
to  intellectual  as  well  as  physical  flight  by  the  terrifying  influences 
of  sound.  If,  however,  we  are  to  succeed  in  making  any  recom- 
mendation of  the  slightest  value  to  our  fellow  citizens  we  must  at 
the  outset  compose  our  nerves  .and  endeavor  by  the  use  of  plain 
language  to  ascertain  the  precise  nature  of  our  industrial  con- 
dition. Are  we  prosperous,  or  are  we  suffering?  Is  anybody  in- 
jured, and  by  whom?  Has  this  octopus  of  which  we  hear  so  much 
taken  possession  of  anybody  or  anything?  On  whom  or  on  what 
is  it  preying?  Where  is  its  lair? 

To  a  very  great  extent  these  questions  have  been  answered 
in  the  course  of  these  proceedings.  Eepresentatives  of  labor  or- 
ganizations have  told  us  from  this  platform  that  wages  are  higher 
than  ever  before.  Certainly,  these  laborers  do  not  appear  to  suf- 
fer from  any  form  of  oppression.  But  when  we  are  about  to  ex- 
press gratification  at  these  comforting  tidings,  we  are  warned 
in  solemn  but  mystical  language  that  we  are  seeking  to  "place 
the  dollar  above  the  man."  Now,  what  in  the  name  of  common 
sense  can  be  the  function  of  the  dollar  except  to  improve  the 
condition  of  the  man?  Again,  when  we  seek  to  ascertain  the  ef- 
fect of  corporate  organizations  on  production,  that  is  to  say,  on 
prosperity,  we  are  told  that  a  "God-made  man"  is  one  thing,  and 
a  "man-made  man"  is  another;  that  the  "God-made  man"  pos- 
sesses in  large  degree  the  attributes  of  divinity,  while  the  "man- 
made  man"  seems  to  have  escaped  from  his  creator,  and  to  have 
developed  habits  of  depravity  during  the  separation.  If  this 
statement  embodied  a  profound  truth  I  am  at  a  loss  to  understand 
what  light  it  could  throw  on  the  question  before  us.  We  are  dis- 
cussing the  effects,  not  the  sources  of  corporate  existence.  But 
as  matter  of  fact,  is  there  such  a  thing  as  a  "God-made  man"  in 
the  world?  There  is,  but  he  is  scarce  and  rapidly  growing 
scarcer.  Why,  the  "God-made  man"  is  the  original  savage. 

Do  you  suppose  that  the  oration  delivered  by  Mr.  Bryan  this 
morning,  or  the  rhetoric  with  which  he  moves  multitudes  to  wild 

587 


enthusiasm  in  every  part  of  this  country,  could  be  evolved  from 
the  natural  resources  of  man?  The  education  which  fits  him  for 
the  platform,  the  books  which  he  has  read,  the  very  clothes  that 
he  wears,  have  all  been  contributed  to  him  by  other  men.  He  is, 
himself,  at  once  a  divine  creation  and  a  human  development.  In 
his  natural  abilities  and  disposition  he  is  a  "God-made  man"  and 
a  credit  to  his  creator;  in  his  acquirements  and  in  his  extraordin- 
ary influence  he  is,  thank  heaven,  a  splendid  type  of  the  "man- 
made  man." 

I  listened  to  my  friend  from  Indiana  with  great  interest  while 
he  advanced  constitutional  objections  to  remedies  suggested  by 
Mr.  Bryan  for  what  both  appeared  to  regard  as  some  evil  or  other 
in  our  industrial  system.  I  wondered  what  the  evil  was  of 
which  they  complained,  and  I  had  hoped  that  he  would  make  it 
clear,  but  I  am  wondering  yet.  If  there  be  an  evil,  Mr.  Bryan's 
proposition  that  it  must  be  suppressed  through  the  Constitution, 
or  in  spite  of  it,  is  unanswerable.  But,  I  repeat,  what  is  the  evil 
of  which  gentlemen  here  complain?  The  chief  cause  of  alarm 
seems  to  be  fear  that  competition  will  be  stifled,  yet  the  natural, 
nay,  the  inevitable  result  of  competition,  is  the  object  of  their 
most  vehement  denunciations.  I  confess  I  am  at  a  loss  to  under- 
stand the  mental  processes  which  lead  men  to  laud  competition 
and  yet  to  condemn  the  fruit  which  competition  must  always 
bear.  Do  you  want  competition,  or  do  you  not? 

A  Voice :     Yes,  we  want  competition. 

Yes,  you  want  competition.  There  is  a  very  frank  man,  who, 
I  believe,  agrees  in  the  main  with  the  proposition  of  Mr.  Bryan. 
He  wants  competition.  Can  you  have  competition  without  com- 
petitors? If  there  be  competition  must  not  somebody  succeed  in 
it?  If  one  competitor  far  excells  all  others,  will  not  that  excel- 
lence constitute  a  monopoly?  Will  you  suppress  competition 
when  it  develops  unapproachable  merit?  Will  you  place  limits 
upon  excellency? 

A  Voice:  We  object  to  the  railroads  being  used  for  the 
benefit  of  one  set  of  fellows  to  the  detriment  of  another.  That 
is  a  monopoly. 

Mr.  Cockran :  I  agree  with  you  there.  I  would  invoke  all  the 
power  of  government  to  prevent  that  abuse  and  to  suppress  any 
monopoly  built  on  it  or  on  any  form  of  government  favor.  But 
for  the  same  reason  that  I  would  suppress  the  monopoly  built  on 
favor,  I  would  protect  the  monopoly  created  by  excellence.  There 
is  no  way  to  suppress  a  monopoly  arising  from  conspicuous  merit 
except  by  the  suppression  of  merit.  If  the  producer  of  the  best 
commodity  may  not  dominate  the  market  for  that  particular  ar- 

588 


tide,  neither  should  the  possessor  of  particular  ability  in  any 
other  department  of  human  endeavor.  Must  we  place  restrictions 
on  capacity  in  law  and  medicine,  so  as  to  place  the  capable  and 
the  incapable  on  a  common  level?  Must  we  prohibit  the  com- 
petent lawyer  from  being  more  successful  in  his  advocacy  than 
his  incompetent  brother?  Must  we  prevent  the  experienced 
physician  from  being  more  efficient  in  checking  disease  and  re- 
lieving pain  than  the  beginner  who  has  just  hung  out  his  shingle? 

Mr.  Bryan's  position,  as  he  states  it,  is  that  monopoly  in  pri- 
vate hands  is  always  oppressive.  Instead  of  distinguishing  be- 
tween corporations  which  dominate  the  market  by  excellence  and 
those  dominating  it  by  favor,  he  appears  to  distinguish  between 
those  which  are  successful  and  those  which  are  not. 

The  concern  which  has  never  been  able  to  extend  its  trade  be- 
yond the  limits  of  one  locality1  he  would  not  molest,  while,  as  I 
understand  it,  his  plan  would  practicallv  exclude  by  a  system  of 
federal  licenses  the  most  prosperous  industries  from  inter-state 
commerce,  merely  because  they  have  succeeded  in  the  field  »f 
competition — whether  that  success  was  due  to  merit  or  favor. 
This  would  be  ruinous  to  them,  but  it  would  also  prevent  the  vast 
body  of  consumers  from  enjoying  the  most  efficient  service  and 
the  cheapest  goods.  But  if  those  who  succeed  in  the  field  of  indus- 
trial competition  are  to  be  punished  by  the  exclusion  of  their 
products  from  other  states,  similar  restrictions  should  be  imposed 
on  those  who  succeed  in  the  field  of  intellectual  competition.  The 
most  successful  lawyer,  physician  or  orator,  should,  so  to  speak,  be 
localized — prevented  from  invading  other  states  with  his  superior 
abilities,  except  under  oppressive  conditions.  If  successful  law- 
yers are  to  be  penalized,  I  know  of  one  or  two  mvself,  whom  I 
would  be  glad  to  see  excluded  from  "Washington  and  the  Supreme 
Court  of  the  United  States.  But  it  is  hardly  possible  that  Con- 
gress could  be  induced  to  pass  a  general  law  prohibiting  excellence 
in  all  departments  of  human  endeavor.  Mr.  Bryan's  suggestion, 
like  all  other  radical  propositions,  if  it  were  ever  brought  within 
the  domain  of  practical  politics,  would  most  likely  result  in  a 
compromise.  Congress  might  decide  to  discriminate  against  the 
successful  in  some  one  competition,  but  not  in  all.  Its  selec- 
tion for  repressive  discrimination  would  very  probably  be  the 
most  successful  orator,  for  the  majoritv  of  the  members  would 
like  to  he  his  competitors,  and  thev  might  be  glad  to  embrace  an 
effective  plan  for  excluding  from  their  districts  whomsoever  had 
proved  himself  a  superior  in  the  art. 

A  Voice:     Do  you  contend  that  all  the  dominating  industrial 

589 


forces  of  to-day  have  secured  that  superiority  from  fair  com- 
petition? 

Mr.  Cockran :  No,  sir.  As  I  said  last  night  at  some  length, — 
perhaps  at  such  length  as  to  make  it  ohscure, — some  industries 
dominate  the  market  through  the  merit  of  their  products  estab- 
lished by  free  competition,  while  others  control  it  with  products 
of  inferior  merit  through  government  favor.  Any  industry  main- 
taining a  domination  or  monopoly  of  the  market  by  the  aid  of 
government,  direct  or  indirect,  whether  extended  through  favors 
granted  by  corporations  exercising  public  franchises  or  through 
tariff  laws,  is  necessarily  an  oppressive  monopoly,  because  if  it 
could  flourish  beyond  all  others  through  the  excellency  of  its 
service,  it  would  not  need  government  favor  and  would  not 
accept  it. 

For  the  same  reason  that  free  competition  leads  to  the  dom- 
ination of  the  best,  restricted  competition  leads  to  the  domination 
of  the  baser,  if  not  of  the  basest. 

•  A  Voice :  Do  you  carry  your  principles  of  competition  to  the 
competition  of  workingmen  for  a  job?  Do  you  carry  that  com- 
petition— that  principle — right  down  to  that  basis? 

Mr.  Cockran :  Yes,  sir.  The  effect  of  free  competition  among 
laborers  .is  to  secure  highest  wages  and  steadiest  employment  for 
the  best.  You  surely  would  not  prefer  to  see  the  inferior  work- 
man preferred  to  the  superior — and  one  or  the  other  must  have 
the  preference. 

A  Voice :  I  would  like  to  ask  you  also,  will  you  kindly  repeat 
while  you  have  the  platform  what  you  said  last  night  in  regard  to 
the  relationship  of  the  employer  and  employee? 

Mr.  Cockran :  If  you  can  stand  it,  I  might  try.  But  if  the 
statement  was  not  clear  last  night  to  repeat  it  now  would  hardly 
be  profitable.  I  will,  however,  refer  to  it  before  I  leave  the  plat- 
form. 

We  seem  to  have  drifted  into  an  atmosphere  of  bewildering 
vagueness  concerning  what  is  called  the  evil  of  monopoly.  I 
repeat  if  there  be  an  evil  pressing  on  the  necks  of  people,  what- 
ever its  source,  I  am  ready  to  enlist  under  any  banner  to  suppress 
it.  If  the  Constitution  stand  in  the  wav  of  redressing  it,  then  I 
say  let  us  smash  the  Constitution  and  from  its  fragments  let  us 
fashion  weapons  for  the  overthrow  of  the  oppressor.  If  corporate 
organization  be  an  evil  thing,  if  you  can  show  me  an  evil  flowing 
out  of  it  and  inseparable  from  it,  I  would  not  hesitate  a  moment 
to  adopt  Mr.  Bryan's  remedy.  But  when  it  is  admitted,  as  Mr. 
Bryan  admitted  this  morning,  that  these  evils  of  monopoly  have 
not  yet  become  apparent, — that  they  are  evils  anticipated,  not 

590 


suffered, — why,  then,  I  say  to  him  or  to  anybody  who  agrees  with 
him,  you  are  simply  exciting  yourself  over  a  fanciful  picture  of 
your  own  creation.  Your  excessive  affection  for  your  fellows  has 
conjured  up  a  host  of  evils  existing  only  in  your  own  brain.  You 
are  constituting  yourself  a  knight  errant  of  political  economy, — 
endangering  the  peace  and  prosperity  of  men  by  well-meant  but 
foolish  attempts  to  redress  imaginary  wrongs, — not, — it  is  true, — 
like  Don  Quixote  tilting  against  windmills,  but  attempting  to 
enlist  the  windmills  on  your  side. 

The  change  which  has  come  over  this  world  within  the  last 
ten  years  is  the  great  phenomenon  of  civilization.  A  dozen  years 
ago  none  but  the  largest  cities  contained  public  parks.  The  pleas- 
ure grounds  laid  out  at  the  public  expense,  and  the  drives  which 
led  to  them,  were  fully  available  only  to  those  who  owned  their 
own  carriages.  To-day  every  town  of  considerable  size  possesses 
its  place  of  recreation,  while  every  mechanic  and  laborer  can  use 
the  driveways  on  a  bicycle  of  his  own.  The  journey  to  and  from 
the  place  of  labor  which  formerly  the  laborer  made  every  day  at 
a  snail's  pace  in  wretched  street  cars,  with  spluttering  oil  lamps, 
drawn  by  miserable  horses  or  mules,  is  made  to-day  in  rapid 
comfortable  vehicles,  lighted  and  moved  by  electricity.  Every 
workman  is  better  housed,  earns  higher  wages,  eats  more  abun- 
dant and  more  wholesome  food,  reads  more  books  end  better 
books  than  ever  before  in  the  history  of  the  race.  Everywhere 
we  find  the  masses  of  the  people  entering  into  the  possession  of 
their  own,  showing  by  the  ruddier  flush  of  health  on  their 
cheeks  and  the  increased  efficiency  of  their  arms  that  God 
Almighty  is  guiding  the  race  forward  and  upward, — that  the 
height  which  man  has  reached  is  not  a  dizzy  eminence  from  which 
he  will  fall,  back  to  disaster,  but  solid  ground  from  which  he  will 
rise  to  still  wider  prosperity. 

When  we  realize  that  this  is  an  age  of  marvelous  improvement, 
that  the  conditions  of  men  are  growing  better  and  better  every 
day,  we  ought  to  hesitate  a  while  before  we  change  the  industrial 
system  evolved  from  experience,  for  fanciful  experiments  sug- 
gested by  exuberant  rhetoric. 

Mr.  Morgan  has  called  my  attention  to  the  relationship  be- 
tween employer  and  employee,  and  I  will  say  one  word  about  it 
before  I  leave  the  platform.  It  is  a  grievous  disappointment  to 
me  that  this  conference  which  has  wasted  much  time  over  what 
T  cannot  help  calling  fanciful  conditions — conditions  about  which 
we  are  not  agreed — has  almost  completely  ignored  the  gravest 
peril  to  civilization,  the  most  difficult  question  which  civilized 
man  must  solve. 


591 


While  we  have  been  discussing  shadowy  evils  and  impalpable 
dangers,  denouncing  "corporate  greed"  and  hurling  defiance  at  the 
"octopus,"  we  have  paid  little  or  no  attention  to  these  industrial 
disturbances  which  at  recurring  intervals  threaten  to  arrest  and 
paralyze  industry.  We  may  differ  about  the  operations  of  trusts, 
we  may  deny  their  existence,  but  no  man  can  be  indifferent  to  the 
strike  by  which  the  convenience  of  thousands  is  invaded,  the  wel- 
fare of  hundreds  of  thousands  imperiled,  the  peace  of  whole  com- 
munities disturbed,  citizens  ridden  down  and  beaten  in  the  streets 
who  are  at  least  the  equals  in  civic  virtue  of  the  officers  who  club 
them. 

A  Voice :  Is  it  not  possible  for  the  community  as  a  whole  to 
take  possession  of  the  machinery  of  government,  and  through 
that,  the  machinery  of  production  and  distribution,  and  taking 
possession  of  that  machinery  of  production  and  distribution,  use 
it  to  distribute  the  product  among  the  men  who  produce,  and 
them  alone? 

Mr.  Cockran :  My  answer  to  that  is  this :  it  might  be  possible, 
but  it  would  be  highly  imprudent.  It  may  be  that  we  are  ap- 
proaching a  condition  of  socialism,  but  I  don't  think  we  are  ready 
for  it  yet.  As  I  said  yesterday,  I  am  never  frightened  by  a  word. 
If  socialism  meant  a  greater  abundance  of  commodities  I  would 
be  the  first  to  welcome  it.  I  believe,  however,  it  would  neither 
swell  the  total  volume  of  production  nor  increase  the  laborer's 
share  of  it.  If  the  state  took  into  its  own  control  the  whole  busi- 
ness of  production  and  distribution,  I  do  not  believe  that  the 
laborer  Would  get  a  larger  share  of  the  product  than  he  enjoys  to- 
day, or,  in  other  words,  that  his  wages  would  be  higher.  Under 
our  existing  industrial  system  nearly  the  whole  value  of  every 
commodity  is  distributed  among  the  laborers  who  produce  it. 
The  gentleman  who  has  interrupted  me  evidently  assumes  that 
the  difference  between  the  value  of  the  wages  paid  to  the  laborer 
who  finishes  an  article  and  the  whole  value  of  that  article  repre- 
sents the  profit  of  his  employer,  but  this  is  a  grievous  error. 
When  an  article  is  finally  placed  on  the  market  for  consumption, 
the  price  which  it  brings  must  repay  not  merely  the  laborer  who 
finished  it,  but  every  person  who  contributed  to  its  production. 
If  this  chair  be  worth  five  dollars  and  the  washes  of  the  laborer 
who  finished  it  be  one  dollar,  the  difference  does  not  go  to  the 
employer.  From  that  fund  of  four  dollars  must  be  paid  every 
man  who  has  contributed  to  the  chair,  at  any  stage  of  its  manu- 
facture, from  the  moment  when  the  axe  was  first  swung  against 
the  root  of  the  tree  to  the  moment  when  the  finished  article  was 
delivered  to  the  purchaser.  In  fact,  the  proceeds  of  that  chair 

692 


is  divided  among  laborers  all  over  the  world,  the  share  of  each 
being  fixed  by  the  proportion  which  his  labor  bears  to  the  total 
labor  bestowed  upon  it. 

If  the  state  replaced  the  private  capitalist  in  the  task  of  or- 
ganizing or  employing  labor,  the  cost  of  discharging  that  duty 
would  be  deducted,  as  it  is  now,  from  the  total  value  of  the  prod- 
ucts, and  I  venture  to  say  that  the  sum  charged  for  that  purpose 
would  be  more  than  the  present  profit  of  capital.  Indeed,  the 
distinction  between  capital  and  labor  in  my  judgment  is  largely 
fanciful.  Capital  is  but  stored  up  labor.  A  man  with  his  naked 
hands  can  labor,  but  not  effectively.  With  his  fingers  he  could 
turn  over  a  few  square  feet  of  earth  in  a  day ;  with  a  plow  he  could 
turn  over  several  acres  in  the  same  period.  A  plow  is  capital. 
The  tools  by  which  the  making  of  that  chair  was  facilitated, 
the  warehouse  in  which  it  was"  offered  for  sale,  and  the  wagon  in 
which  it  was  delivered,  are  all  capital.  They  are  the  products 
of  labor  expended  in  other  days.  The  function  of  capital  in 
production  is  to  reinforce  the  efficiency  of  this  day's  labor  by  the 
labor  of  other  days, — another  instance  of  the  close  interdepend- 
ence of  men. 

You  ask  me  what  are  the  functions  of  labor  unions  if  the  rate 
of  wages  be  fixed  by  immutable  laws.  ,  I  answer  that  if  they  can- 
not change  the  relations  between  employer  and  employee,  they 
can  perform  a  better  function.  They  can  promote  an  enlightened 
conception  of  what  these  relations  are.  When  employers  and 
employees  both  realize  that  the  rate  of  wages  is  regulated  by  fixed' 
laws,  that  it  cannot  be  more  and  it  cannot  be  less  than  the  value 
of  the  product,  there  will  be  no  room  for  disputes,  misunderstand- 
ings, or  disturbances.  That  there  is  no  inherent  or  insuperable 
difficulty  in  distributing  the  fruits  of  production  is  shown  by  the 
fact  that  strikes  are  not  universal  in  the  same  fields  of  labor.  It 
is  no  uncommon  spectacle  to  see  one  great  railway  system  par- 
alyzed in  the  throes  of  a  deadly  conflict, — its  service  suspended, 
— its  property  deteriorating, — its  very  existence  imperiled, — 
while  in  the  same  city  another  railway  system,  where  no  higher 
wages  are  paid  and  no  longer  hours  of  labor  exacted,  is  in  the  en- 
joyment of  industrial  peace  and  in  the  full  tide  of  prosperity. 
The  laws  governing  both  systems  being  the  same,  the  difference 
in  their  conditions  must  spring  from  a  radical  difference  in  the 
characters  of  those  charged  with  their  administration. 

I  believe  that  as  employers  realize  they  are  but  captains  of  in- 
dustry directing  the  labor  of  others,  so  as  to  make  it  more  fruitful, 
they  will  encourage  the  formation  of  trades  unions  among  their 
employees  as  a  means  of  simplifying  intercourse  between  them. 

593 


Employers  and  employees  together  cannot  change  the  law* 
that  govern  their  relationship,  but  they  can  aid  each  other  to  dis- 
cover what  these  laws  are.  They  can  save  time  in  the  discovery, 
and  the  time  saved  from  wrangling,  disorder,  riot  and  confusion. 
will  be  expended  in  profitable  production,  and  in  improving  the 
condition  of  every  human  being  throughout  the  country.  In- 
deed, it  is  not  a  Utopian  dream  that  before  another  conference 
of  this  character  assembles,  the  great  corporations  which  are  the 
largest  employers  of  labor,  will  not  merely  insist  upon  the  forma- 
tion of  trades  unions  among  their  employees,  to  economize  time 
in  discussing  the  conditions  of  labor,  but  will  require  them  to 
elect  representatives  to  sit  in  the  boards  of  direction,  thus  im- 
posing on  them  some  responsibility  for  the  management  of  the 
joint  industry — the  partnership — in  the  prosperity  of  which  all 
must  share — in  the  decay  of  which  all  must  suffer. 

A  Delegate :  You  have  said  we  have  been  declaiming  against 
the  trust,  and  that  in  the  entire  conference  nothing  has  been 
shown  as  to  any  evil  committed  by  them. 

Mr.  Cockran :  I  spoke  of  those  that  don't  enjoy  any  aid  from 
government. 

Same  Delegate:  Take  the  Federal  Steel  Trust.  It  was  or- 
ganized with  a  capital  of  $200,000,000.  In  less  than  six  months' 
time  every  product  of  that  trust,  steel,  iron,  iron  nails,  barbed 
wire,  and  all  necessities  of  the  farmers,  and  everything  that  en- 
ters into  the  construction  of  buildings  in  every  city  in  this  coun- 
try, and  in  the  construction  of  every  farmhouse  in  the  United 
States,  has  been  increased  from  100  to  126  per  cent,  whereas, 
labor  in  those  mills,  as  shown  by  the  Amalgamated  Steel  Union, 
has  only  risen  about  10  to  25  per  cent.  Now,  I  wish  to  know  if 
the  consumers  of  this  country  have  not  been  robbed  of  that  90  and 
'  100  per  cent  difference  between  the  price  of  labor  and  the  price 
of  the  finished  product  furnished  to  the  50,000,000  farmers  in  this 
country  ? 

Mr.  Cockran :  One  moment ;  you  have  asked  me  a  question. 
I  will  answer  it.  (Mr.  Garland  rises.)  I  yield,  however,  to  a 
gentleman  who  represents  an  organization  of  workingrnen. 

Delegate  Garland:  They  increased  the  wages  from  10  to  15 
per  cent. 

Another  Delegate:  Now,  I  wish  to  say,  with  due  regard  to  all 
the  trades  unions  of  this  country,  because  I  advocate  their  exist- 
ence and  I  believe  they  are  a  public  blessing,  that  any  arrange- 
ments between  the  trades  unions  and  the  capitalized  trusts  which 
enforce  from  the  consumers  of  this  country  more  than  an  equit- 


able  wage,  as  compared  with  the  product  of  the  other  producing 
lac'tors,  would  be  unjust. 

Several  delegates  here  arose  and  piled  questions  upon  Mr. 
Coekran. 

Mr.  Coekran :  It  is  quite  useless  to  repeat  constantly  the  same 
statements.  I  have  said  again  and  again  on  this  platform  that  if 
a  corporation  or  an  industry  dominates  the  market  by  any  other 
means  than  the  cheapness  of  its  product,  it  is  a  public  injury. 
Xow,  I  say  that  an  industrial  organization  which  dominates  the 
market  by  furnishing  the  best  service,  that  is  to  say,  the  best  com-> 
modities,  can  maintain  its  pre-eminence  only  by  the  same  means. 
Jf  it  undertake  to  exact  undue  profits,  if  it  abuse1  the  advantage 
derived  from  excellence  displayed  in  competition,  and  the  gov- 
ernment remains  impartial,  competition  would  arise  in  an  instant. 

A  Delegate :  Your  position  is,  then,  that  monopoly  is  impos- 
sible? 

Mr.  Coekran :  It  depends  again  on  what  you  mean  by  monop- 
oly. 

Same  Delegate:  What  I  mean  by  monopoly  is  the  privileges 
and  business  enjoyed  by  one  institution. 

Mr.  Coekran :  I  don't  think  any  further  discussion  between 
you  and  me  can  be  very  useful  (addressing  delegate),  as  I  can 
answer  your  questions  only  by  repeating  what  I  have  said  many 
times  already.  There  is  no  way  by  which  you  can  establish  a 
monopoly  without  government  favor,  except  by  excellence  in 
serving  the  public.  While  that  excellence  lasts  I  don't  object  to 
it,  even  though  you  call  it  a  monopoly.  The  industrial  history 
of  this  country  proves  that  in  the  absence  of  government  inter- 
ference no  monopoly  ever  advanced  prices  to  exact  undue  profits 
without  by  that  fact  provoking  opposition,  and  effective  opposi- 
tion. 

Delegate  Lockwood :  Do  you  mean  by  government  favor,  rail- 
road favor? 

Mr.  Coekran :  Any  kind  of  favor.  Favor  by  tariffs,  favor  by 
railroads,  favor  by  gas  companies,  favor  by  express  companies, 
favor  by  any  agency  chartered  by  government  to  perform  a  public 
service.  I  say  government  should  always  be  impartial  between 
citizens.  It  should  not  merely  be  impartial  itself,  but  every 
agency  through  which  it  performs  any  function  should  be  im- 
partial. 

Let  me  revert  once  more  to  the  question  which  I  consider  of 
vital  importance.  I  hope  these  gentlemen  who  by  their  ques- 
tions show  they  entertain  socialistic  opinions  will  come  on  this 
platform  and  expound  them.  I  think,  however,  we  will  all  admit 

595 


that  socialism,  conceding  it  to  be  a  remedy,  is  at  least  a  distant 
one.  I  am  not  here  to  indulge  in  abstractions  or  speculations 
about  remedies  which  are  necessarily  remote.  1  came  to  this  con- 
ference in  the  hope  that  we  could  make  some  practical  suggestions 
which  might  be  immediately  adopted.  Everybody  concedes  that 
discrimination  by  corporations  between  citizens  is  an  offence 
against  economic  laws,  and  should  be  made  a  serious  offence 
against  statutory  laws.  .  I  believe  we  all  concede  that  publicity 
if  not  a  complete,  is  at  least  a  partial  remedy,  for  this  form  of  of- 
fence. Surely  we  may  hope  that  our  concurrence  on  this  subject 
will  take  the  form  of  recommendations  which  will  soon  be  en- 
grafted on  the  laws  of  every  state.  For  my  own  part,  I  had  hoped 
that  we  would  go  a  step  further  and  agree  on  some-measure  which 
might  prove  effective  in  preventing  the  recurrence  of  strikes. 
While  we  are  some  distance  from  socialism,  there  are  insuperable 
objections  to  interference  by  government  in  the  industry  of  pri- 
vate citizens,  but  it  is  entirely  within  the  power  of  the  state  to 
provide  that  corporations  exercising  public  franchises  should  be 
held  to  some  accountability  when  the  convenience  of  the  public 
is  disturbed  by  the  suspension,  of  their  service.  It  seems  to  me 
this  power  could  be  exercised  so  as  to  maintain  industrial  peace. 
When  a  railroad  company  fails  to  furnish  transportation, 
when  a  gas  company  fails  to  furnish  light  to  highways  or  to  in- 
dividuals, when  any  enterprise  chartered  by  the  state  for  public 
purposes  fails  to  exercise  its  function,  it  is  the  business  of  the 
state  to  ask  the  reason  why ;  in  the  absence  of  a  proper  explana- 
tion, its  charter  should  be  revoked,  while  every  citizen  incon- 
venienced by  its  collapse  should  have  a  right  to  substantial  dam- 
ages. I  don't  believe  the  state  could  settle  industrial  disputes 
as  equitably  or  as  effectually  as  employers  and  employees  them- 
selves would  settle  them,  if  they  could  be  forced  or  induced  to 
discuss  them  together.  When,  therefore,  a  railroad  or  other 
public  corporation  which  has  been  prevented  by  a  strike  from 
exercising  its  functions  can  say  we  have  met  our  employees  by 
agencies  of  their  own  selection,  and  we  are  ready  at  any  time  to 
meet  them  again  for  full  and  free  discussion  of  all  questions  be- 
tween us,  proof  of  that  statement  should  be  accepted  as  a  com- 
plete defense  to  any  action  either  by  the  state  or  by  individuals. 
I  had  hoped  that  such  a  law  might  be  recommended  with  the  con- 
currence of  every  person  in  this  conference,  and  I  cherish  that 
hope  still.  It  would  not  be  prescribing  a  new  system  of  corpo- 
rate management,  it  would  be  merely  compelling  a  few  concerns, 
— a  minority  whose  management  is  ignorant  and  benighted, — to 
adopt  the  methods  pursued  to-day  by  the  enlightened,  well  man- 

596 


aged  corporations  which  constitute  a  majority  of  all  our  industrial 
organizations. 

The  employer  need  not  fear  that  this  would  reduce  him  to 
helplessness  against  unjust  demands.  There  is  no  better  method 
of  meeting  an  unjust  demand  than  by  insisting  that  it  be  made 
public,  and  thus  invoking  against  the  laborer  who  advances 
it  that  public  opinion,  which  is  his  sole  support,  and  which  fur- 
nishes him  the  formidable  weapon  of  the  boycott. 

While  the  state,  as  I  have  said,  would  have  no  right  to  inter- 
fere in  the  management  of  a  private  business  or  manufacturing 
corporation  fo  adjust  disputes  with  its  employees,  it  has  a  right  to 
exercise  its  undoubted  control  of  corporations  discharging  pub- 
lic functions  in  such  a  manner  as  to  compel  full  and  free 
discussion  between  these  corporations  and  their  employees  of 
every  question  that  threatens  to  interrupt  their  peaceful  and 
efficient  cooperation.  The  result  of  such  a  system  would  be  so 
beneficial  to  the  public  corporations  on  which  it  had  been  im- 
posed that  private  employers  would  be  quick  to  adopt  it  and  indus- 
trial peace  would  be  established  on  the  sure  foundation  of  justice 
and  mutual  interest. 

This  is  a  suggestion  of  peace,  of  progress  and  prosper- 
ity,— not  a.  suggestion  to  enact  any  new  statute  law,  but  to 
obey  an  immutable  economic  law,  to  acknowledge  that  partner- 
ship of  all  men  in  industry  which  has  existed  ever  since  free  labor 
was  established  by  the  spread  of  Christianity  throughout  the 
world. 

Mr.  Bryan  appears  to  think  that  the  prosperity  of  the  people, 
or,  in  other  words,  the  amount  of  wealth  which  they  can  create  is  a 
sordid  question.  A  sordid  question!  Why,  upon  the  volume  of  pro- 
duction every  form  of  prosperity,  industrial  or  material,  depends. 
Could  the  poet  spend  his  days  musing  on  the  sublime  and  beauti- 
ful, if  the  necessaries  of  life  were  not  supplied  to  him  from  the 
commodities  produced  by  others?  Must  not  the  philosopher,  sur- 
veying the  wide  expanse  of  the  heavens,  depend  for  his  telescopes 
and  mathematical  instruments  upon  other  hands  whose  labor  he 
reinforces  by  his  discoveries?  Could  the  physician  spend  days 
and  nights  at  the  bedside  of  suffering,  relieving  pain  and  fighting 
death,  if  the  food  that  supports  him,  the  house  that  shelters  him, 
the  clothes  that  promote  his  comfort,  and  the  medicines  that 
reinforce  his  skill,  were  not  produced  by  the  industry  of  other  men 
whom  he  has  never  seen?  Does  not  the  painter  use  the  labor 
and  insrenuitv  of  a  thousand  persons  in  the  pigments  and  paints 
with  which  he  reproduces  upon  canvas  the  conceptions  of  his 
dreams?  Ts  not  the  marble  which  the  sculptor  fashions  into  the 

597 


semblance  of  life,  the  product  of  a  ruder  toil?  Which  of  us  can 
live  independently  of  his  fellows?  Who  can  labor  intelligently 
for  his  own  benefit  without  contributing  to  the  prosperity  of  this 
industrial  partnership  binding  us  all  together  in  the  great 
scheme  of  cooperation  which  is  at  once  the  object  and  the  vital 
principle  of  civilized  life? 

Throughout  Mr.  Cockran's  remarks  there  was  a  running  fire 
of  questions  and  comments  from  the  delegates.  This  broke  into 
his  train  of  thought,  but  the  speaker  courteously  replied  to  those 
on  the  floor,  and  after  some  time  the  interruptions  ceased  and  the 
delegates  only  broke  the  silence  with  which  they  listened,  to  ap- 
plaud the  points  made  by  the  orator. 

HAZEN  S.  PINGKEE. 

Governor  Hazen  S.  Pingree,  to  whom  Prof.  George  Gunton 
addressed  some  of  his  remarks  Thursday  night,  replied  in  a  letter 
as  follows : 

Prof.  George  Gunton, 

Dear  Sir :  I  listened  with  great  interest  to  your  address  last 
evening  before  the  trust  conference,  in  defense  of  the  trust.  The 
mental  equipment  and  training  of  your  profession  are  supposed 
to  enable  you  to  comprehend  a  subject  readily,  correctly  and 
thoroughly. 

When,  therefore,  you  skimmed  across  the  surface,  and 
trimmed  around  the  edges,  of  the  thought  expressed  in  my  ad- 
dress, criticising  things  which  I  did  not  emphasize,  and  ignoring 
the  real  truths  which  I  sought  to  illustrate,  perhaps  I  may  be  per- 
mitted to  register  an  objection,  or  at  least  to  set  you  aright  in 
the  matter. 

You  commenced  by  saying  that  the  burden  of  my  discourse 
was  that  the  trust  leads  to  industrial  slavery,  that  industrial 
slavery  destroys  independence,  and  that  without  independence, 
American  manhood  is  destroyed.  You  then  proceeded  to  de- 
monstrate, in  the  manner  natural  to  professors,  i.  e.,  with  a  regard 
only  to  theoretical  conditions,  that  where  there  is  great  wealth 
there  is  ample  freedom. 

Then,  with  an  impressive  tone,  you  asked  me  if  I  wanted  the 
slavery  that  came  with  the  poverty  which  would  result  if  we  check 
the  development  of  trusts.  I  can  only  reply  that  the  deduction 

598 


which  you  make,  from  the  statements  in  my  paper,  is  unfair,  but 
that,  granting  your  logic,  I  am  and  would  be  entirely  satisfied 
with  the  prosperity  of  this  country  before  the  trust  reared  its 
head. 

Now  I  have  no  especial  quarrel  with  professors,  nor  with  their 
theoretical  methods  of  dealing  with  things.  But  I  do  insist  that 
if  they  are  to  deal  with  practical  questions,  they  should  not  wan- 
der off  into  the  realms  of  the  speculative  or  the  ideal  by  discuss- 
ing things  as  they  ought  to  be,  and  not  as  they  actually  are.  I 
find  no  fault  with  your  generalizations  respecting  poverty  and 
wealth  and  slavery.  I  presume  they  are  correct  according  to  the 
text  books. 

But  you  entirely  ignored  the  thought  it  was  my  purpose  to 
express.  I  said  that  the  actual,  existing,  present  day  trust,  by 
its  unlawful,  indefensible  methods,  deprives  the  very  best  element 
of  our  people  of  that  equality  of  opportunity  which  has  been  the 
foundation,  the  rock-bottom,  of  our  greatness  as  a  nation. 

The  monstrous  commercial  deformity,  which  you  defend  by 
the  application  of  text  book  principles,  by  the  crushing,  con- 
scienceless force  of  immense  wealth  and  resources,  inhumanly 
used,  denies  the  independent  business  man  the  right  to  earn  a 
living.  Under  trust  domination,  there  will  be  no  equality  of 
opportunity.  That  is  the  point  I  made  in  my  address,  and  you 
ignored  it. 

I  think  you  will  modify  your  opinions  somewhat,  if  you  will 
'burn  your  text  books,  lock  the  door  to  your  study,  and  come  down 
into  the  market  place  and  see  the  real  thing  at  work.  If  you  do 
I  think  you  will  no  longer  defend,  or  apologize  for  the  trust. 
You  will  be  glad,  then,  to  leave  that  work  to  the  newspapers, 
magazines,  public  men  and  orators — who  are  paid  for  it,  and  paid 
liberally,  too. 

When  you  enter  into  the  market  place,  and  perhaps  enter 
some  of  the  secret  chambers,  called  directors'  rooms,  it  will  not 
take  you  long  to  find  out  that  human  selfishness  and  greed  set 
at  naught  all  the  beautiful  rules  and  axioms  of  political  and  social 
economy.  You  will  then  no  longer  be  guilty  of  saying  (as  you 
did  yesterday  in  answer  to  my  paper)  that  because  of  the  trust 
the  purchasing  power  of  the  dollar  is  increasing  every  day,  that 
with  such  increase  comes .  individual  wealth,  that  individual 
wealth  gives  independence,  that  independence  means  freedom, 
and  that  therefore  my  contention,  that  the  effect  of  the  trust  (the 
concentration  of  wealth  and  business  into  the  hands  of  a  few) 
to  separate  our  people  into  two  classes — industrial  masters  and 
slaves — is  all  bosh. 

599 


I  think  that  when  you  come  face  to  face  with  actual  condi- 
tions, in  the  market  place,  when  you  see  the  animals  feeding  and 
see  upon  what  they  are  feeding,  you  will  not  deceive  yourself 
longer  into  believing  that  any  increase  in  purchasing  power  of 
the  dollar  necessarily  means  that  those  dollars  are  being  dis- 
tributed by  the  trust  in  larger  quantities  than  ever  before  among 
all  classes  of  our  people.  You  are  asking  the  people,  the  inde- 
pendent business  men,  whom  the  trust  has  forced  out  of  business, 
to  believe  that  because  a  dollar  will  buy  more,  therefore  they  have 
more  dollars,  than  ever  before.  If  this  is  not  true,  and  it  cer- 
tainly is  not,  the  beautiful  fabric  of  logic  which  you  have  fash- 
ioned, as  outlined  in  the  preceding  paragraph,  falls  to  pieces. 
The  trouble  with  it  is  that  the  owners  of  trusts  are  not  philan- 
thropists, and  they  keep  the  dollars  themselves. 

And  that  is  the  meat  of  this  question.  The  trust  tends  to 
concentration  of  wealth  into  the  hands  of  a  very  few.  and  because 
those  few  are  nothing  but  men,  they  are  ruled  by  the  human 
motives  of  selfishness  and  greed,  and  not  by  the  text  book  rules 
of  social  economy.  When  you  are  dealing  with  the  trust,  there- 
fore, pardon  me  for  suggesting  that  you  recognize  real  condi- 
tions, face  the  real  thing,  and  not  generalize  about  some  industrial 
organization  that  is  entirely  ideal. 

I  think  you  should  also  recognize  that  the  trust  is  a  human 
contrivance  when  you  are  discussing  the  matter  of  prices  as  af- 
fected by  the  trust.  In  the  -first  place,  it  is  your  duty,  as  a^ 
defender,  or  advocate,  or  apologist  of  the  trust,  to  point  out  a 
single  instance  in  which  a  trust  has  voluntarily  reduced  prices. 
In  the  second  place,  I  ask  you  if  you  sincerely  believe  that  any 
trust,  conducted  by  a  human  being,  will  ever  reduce  prices  any 
lower  than  is  absolutely  necessary  to  preserve  the  monopoly? 

Your  associate  on  the  platform  yesterday,  the  attorney-gen- 
eral from  Maryland,  offered  a  panacea  in  the  shape  of  government 
regulation  through  a  commission.  Government  regulation  is  the 
remedy  which  the  trusts  themselves  suggest.  They  would  like 
nothing  better.  Their  newspapers  and  orators  are  already  advis- 
ing such  a  course.  They  say  it  is  conservative  treatment,  and  that 
is  catching.  There  are  plenty  of  people  who  are  eager  to  be 
looked  upon  as  conservative.  They  want  to  be  patted  on  the 
back  by  the  "conservative  press." 

Why  are  the  trusts  satisfied  with  government  regulation 
through  a  commission?  The  reason  is  plain  enough.  They  rec- 
ognize that  a  growing  hostile  public  sentiment  endangers  their 
life.  Therefore,  it  is  important  to  them  to  pick  out  the  remedy 
which  will  interfere  the  least  with  their  operations.  Hence  the 

ooo 


cry,  quietly  suggested  by  them,  that  government  regulation 
through  a  commission  is  the  proper  thing.  What  has  been  our 
experience  already  with  government  commissions?  I  need  refer 
only  to  the  poor,  weak,  crippled  interstate  commerce  commis- 
sion. Everyone  knows  that  the  railroads  look  upon  it  as  one 
of  their  best  friends,  and  will  continue  to  regard  it  as  such  as 
long  as  the  people  believe  that  the  commission  is  a  protection 
to  them  against  rate  discrimination  and  railroad  oppression.  Its 
uselessness  is  chiefly  due  to  the  fact  that  it  is  absolutely  shorn 
of  its  power  to  do  good  work  by  lack  of  machinery  and  resources 
to  make  it  effective.  A  commission  to  regulate  trusts  would  be  a 
similarly  ineffective  body.  The  power  of  money  and  organization 
would  see  to  it  that  such  a  commission,  while  it  might  have  ample 
powers,  would  have  meager  resources  to  execute  them.  We  are 
facing  a  similar  condition  in<my  own  state,  where  a  commission 
whose  duty  it  is  to  bring  the  tax  dodger  to  justice,  is  being  crip- 
pled and  hindered  by  the  state  authorities,  whose  duty  it  is  to 
furnish  the  funds  necessary  for  the  proper  prosecution  of  the 
work  of  the  commission. 

I  am  of  the  opinion  that  the  only  way  to  treat  an  ulcer  is 
with  the  surgeon's  knife.  Trusts  should  be  cut  entirely  out  of 
our  industrial  body.  I  am  bold  enough  to  predict  that  this  will 
be  the  judgment  of  the  people,  and  if  it  is,  the  method  of  doing 
it,  the  form  which  the  legislation  will  take,  is  a  matter  of  minor 
consideration. 

The  temper  of  last  night's  audience  is  strong  evidence  that 
the  sovereigns  of  this  country  will  not  tolerate  a  temporizing  or 
compromising  treatment  of  this  great  problem.  It  was  a  repre- 
sentative audience.  It  plainly  showed  that  it  had  opinions,  and 
positive  ones  too.  Perhaps  some  of  them  were  born  of  a  bitter 
experience.  It  is  certainly  true  that  this  question  comes  home 
to  everyone  closer  than  the  tariff  question  ever  did.  The  attitude 
of  that  audience  demonstrates  that  the  political  party  or  leader 
who  remains  silent  on  this  question,  or  who  temporizes  with  it 
(another  name  for  conservatism)  will  dash  itself  to  pieces  against 
the  rocks  of  a  hostile  public  opinion  that  is  crystallizing  and 
growing  with  a  rapidity  that  will  unquestionably  make  the  trust 
question  greatly  overshadow  the  artificial  issues  of  imperialism, 
war,  conquest,  new  possessions,  the  glory  of  the  flag,  etc. 

H.  S.  PINGKEE. 


601 


SAMUEL  M.  JONES, 

Mayor  of  Toledo,  Ohio. 

I  am  inclined  to  regard  the  great  growth  of  there  organizations 
within  the  last  few  months  rather  complacently. 

I  believe  in  a  large  programme  for  society.  I  believe  it  to  be 
our  duty  and  privilege  in  this  republic  to  find  a  plan  big  enough 
to  provide  for  all  of  the  people  and  I  see  in  the  growth  of  the  trust 
an  indication  of  the  growing  social  movement  toward  collectiv- 
ism. I  believe  in  brotherhood;  so  do  the  makers  of  the  trust. 
They  believe  in  brotherhood  for  the  fellows  that  are  in  the  trust; 
I  believe  in  the  brotherhood  of  all  men.  The  trust  is  the  Great 
American  Brotherhood  (limited).  We  will  yet  learn  to  utilize  the 
trust  by  amending  the  title,  leaving  off  the  last  word. 

The  trust  is  preparing  the  way,  showing  society  the  great 
benefits  that  may  be  derived  through  association  in  industry  and 
the  great  economic  value  of  association,  both  in  production  and 
distribution.  An  invention  that  lightens  the  burden  of  the 
world's  toilers  and  makes  it  possible  for  one  man  to  do  the  work 
of  twelve  is  called  a  "labor-saving  machine."  Does  it  matter 
whether  the  machine  is  made  of  wood  and  iron  or  composed  of  or- 
ganizations and  associations  of  men?  If  the  result  is  the  same  it 
is  a  labor-saving  machine.  In  this  sense  the  trust  is  a  labor-sav- 
ing machine.  The  fact  that  the  owners  of  the  trust  capture  all 
the  profit  produced  by  the  labor-saving  machine  does  not  affect 
the  truth  of  this  statement.  That  is  the  peculiar  tendency  of  the 
modern  "captain  of  industry."  Labor-saving  machinery  made  of 
wood  and  iron  has  done  very  little  to  lighten  the  toil  of  the  work- 
ers. It  has  usually  resulted  in  saving  labor  for  those  who  do  not 
work.  Take  the  case  of  the  sewing  machine,  one  of  the  greatest 
of  the  labor-saving  inventions.  It  ought  to  bless  the  world  to  a 
far  greater  extent  than  it  doe?.  All  such  inventions  and  com- 
binations should  lighten  the  labor  of  all,  but  within  two  years  a 
committee  of  investigation  of  the  Massachusetts  legislature  found 
women  operating  sewing  machines  in  Boston  sweat-shops  twelve 
hours  a  day  making  boys'  pants  at  19  cents  a  dozen  pairs.  Because 
these  women  work  in  this  slavish  and  dehumanizing  way  their 
employer,  the  "captain  of  industry,"  and  his  family  were  enabled 
to  pass  their  summers  at  Nahant  and  their  winters  in  a  big  house 
in  the  Back  Bay. 

According  to  the  prevailing  conception  people  who  are  thus 
able  to  live  an  idle,  useless  life  at  the  expense  of  other  people's  toil 
are  considered  the  fortunate  members  of  societv.  I  do  not  think 
this  view,  however,  is  the  correct  one.  An  idle  life  is  a  useless 

602 


life,  whether  rich  or  poor.  Indeed,  there  is  reason  to  believe  that 
if  one  is  idle  because  of  riches  there  must  of  necessity  be  guilt  ap- 
proaching crime  in  such  possession  and  resultant  idleness. 

The  triumph  of  the  trust  is  one  of  the  marvels  of  the  closing 
years  of  the  nineteenth  century ;  but  they  are  an  economic  devel- 
opment, strictly  in  the  line  of  progress  and  our  problem  is  not 
how  to  destroy  them,  but  how  to  use  them  for  the  good  of  all. 
Like  their  prototype,  the  labor-saving  machinery  constructed  of 
wood  and  iron,  they  have  come  to  stay.  A  labor-saving  machine 
might  have  great  value  on  account  of  its  producing  capacity,  but 
might  be  so  destructive  of  human  life  as  to  make  it  imperative 
that  it  should  be  so  improved  that  its  "saving"  power  might  be 
utilized  without  injury  to  the  operative. 

Thirty-five  years  ago  I  saw  a  mob  of  teamsters  trying  to  de- 
stroy the  first  pipe  line  ever*built  for  the  transportation  of  oil. 
They  feared  that  the  pipe  line  was  an  "attack  upon  their  craft." 
The  movement  against  the  trust  rests  identically  oil  the  same 
moral  basis  as  the  rage  of  a  mob  against  the  pipe  line,  elevators 
and  labor-saving  machinery  generally,  and  I  predict  that  it  will 
have  the  same  result  in  the  end.  All  the  legislation  thus  far 
against  the  trust  has  been  almost  as  futile  as  a  law  against  the 
change  in  the  moon's  phases  or  the  ebb  and  flow  of  the  tides. 

We  are  not  going  back  to  the  individualistic  method  of  pro- 
duction. We  are  not  going  to  pull  down  the  department  store  in 
order  that  the  people  shall  sustain  fiftv  small  stores  in  place  of 
the  one  department  store.  If  that  is  what  we  propose,  let  us  con- 
tinue the  principle ;  destroy  the  small  stores  and  turn  the  business 
over  to  peddlers.  This  will  be  carrying  to  logical  conclusion  the 
senseless  objection  to  the  department  store  and  the  trust. 

What,  then,  shall  we  do  with  the  trust,  with  the  continually 
increasing  army  of  unemployed  thrown  out  by  these  organiza- 
tions? I  reply,  we  must  organize  government  (society)  in  the 
interest  of  all,  for  the  good  of  all,  so  that  we  may  utilize  the 
economic  side  of  the  trust. 

We  must  leave  off  the  word  (limited)  from  the  Great  American 
Brotherhood  that  I  have  referred  to  and  own  and  operate  the  trust 
for  the  benefit  of  the  people,  as  we  now  own  and  operate  the  post- 
office  trust.  The  profit  that  accrues  to  the  organizations  known 
as  trusts,  by  reason  of  the  economic  production  that  arises  from 
associating  ten  or  more  companies  together,  does  not  beloner  to 
those  who  compose  the  trust  in  anv  ethical  sense.  The  profit  is 
onlv  made  possible  because  the  r>eople  are  here,  the  cities  are  hero 
and  the  means  of  transportation  and  communication  are  here 
and  available,  and  this  profit  that  arises  from  amending  the  ways 

603 


of  competition  is  in  no  just  sense  the  property  of  those  composing 
the  trust. 

It  belongs  to  society,  and  may  be  properly  called  the  "in- 
crement of  associated  organization/'  Neither  the  cities  nor  the 
earth  have  been  created  for  the  benefit  of  the  trusts.  It  is  clear 
that  the  earth  and  the  "natural  opportunities"  that  have  resulted 
in  building  cities,  highways,  railways  and  commerce  were  created 
for  the  benefit  of  all  alike.  Equality  of '  opportunity  or  brother- 
hood is  the  goal  toward  which  the  race  is  struggling,  and  the 
trust,  while  thoroughly  selfish  in  its  inspiration,  is  the  expression 
of  the  great  social  spirit  now  stirring  the  hearts  of  the  people. 

I  can  see  neither  sense  nor  reason  in  the  attempts  to  destroy 
the  labor-saving  machines  by  legislation,  but  I  see  both  reason 
and  hope  for  the  American  people  in  the  movement  that  will 
utilize  all  kinds  of  labor-saving  machines,  including  the  trusts, 
for  the  benefit  of  the  whole  people.  This  can  only  come  about 
by  the  process  of  general  education  that  will  bring  the  classes  to 
understand  and  practice  what  the  masses  now  believe  in — that 
is,  the  brotherhood  of  industry. 

The  movement  toward  municipal  ownership,  toward  public 
ownership,  toward  co-operation  of  every  sort,  indicates  the  chan- 
nel through  which  the  people  are  to  come  into  possession  of  their 
own.  When  they  are  thoroughly  enlightened  they  will  simply  re- 
take in  a  perfectly  orderly  way  the  properties  that  have  passed  out 
of  their  hands  and  become  private  possessions,  usually  through  the 
practice  of  deception  and  fraud.  The  people  will  own  and  operate 
their  own  trust;  its  name  will  be  the  Co-Operative  Common- 
wealth. 


HENRY  W.  BLAIR. 

Ex-Senator  N~e\v  Hampshire. 

Senator  Blair,  of  New  Hampshire,  was  called  upon.  He  said 
in  part : 

I  would,  for  a  moment,  call  attention  to  one  aspect  of  this  dis- 
cussion, and  that  is  the  frequent  assertion  which  we  have  heard 
made  during  its  continuance,  that  the  tariff  is  the  mother  of 
trusts. 

If  you  remove  the  tariff  from  the  productions  of  our  great  in- 
dustrial enterprises,  trusts,  already  international,  and  other  em- 
ployers will  put  their  capital  where  they  can  produce  goods  the 
cheapest.  Their  plants,  machinery  and  money  investments  will 

604 


be  removed  to  other  countries,  where  goods  can  be  manufactured 
by  cheaper  labor  and  poured  into  our  markets,  thus  destroying 
ilie  home  market  for  our  home  people. 

Several  delegates  here  propounded  questions  to  Mr.  Blair 
which  led  to  a  further  statement  of  his  views  at  some  length,  of 
which  no  stenographic  report  was  made.  At  the  suggestion  of  the 
committee  Mr.  Blair  has  reproduced  the  substance  of  what  he 
said,  as  follows : 

Speaking  of  the  competition  between  home  and  foreign  labor, 
under  free  trade,  it  must  be  remembered  that  while  American 
labor  is  more  intelligent  and  therefore  more  productive,  yet  nine- 
tenths  of  the  work  of  the  world  is  done  by  machinery,  and  that 
the  European,  the  Asiatic,  and  later  on,  and  not  much  later  on 
either,  the  African  and  the  islanders  of  the  Oceanic  world,  can 
easily  be  taught  to  handle  and'manipulate  the  machine  even  if  he 
cannot  invent  it;  that  capital  and  machinery  are  easily  portable 
everywhere,  while  labor  is  not,  and  the  more  labor  is  civilized 
and  enlightened,  the  more  it  is  confined  where  it  is,  that  is,  to  the 
locality  of  high  conditions.  Therefore  the  trust  or  any  large  em- 
ployer of  labor  will  go  with  capital  and  machinery  wherever  labor 
is  cheapest  and  most  subservient,  provided  that  by  free  trade  he  can 
still  retain  the  American  market. 

Any  man  can  take  a  million  dollar  plant  of  cotton,  woolen, 
sugar,  or  any  product  of  manufacture  to  England,  Eussia,  China, 
Japan,  Africa  or  the  Philippine  Islands,  in  his  pocket  or  in  his 
check  book,  while  the  thousand  laborers  who  have  lived  by  work- 
ing that  plant  for  half  their  lives,  in  this  country,  are  obliged  to 
remain  and  starve,  unless  they  choose  to  work  for  foreign  pay. 

He  strongly  emphasized  the  fact  that  foreign  labor  would 
soon  learn  how  to  run  the  machines  as  well,  or  nearly  as  well,  as 
our  own  people.  True  they  would  not  invent  them  or  improve 
them  at  first. 

We  should  still  invent  and  construct  machinery,  but  it  would 
be  for  exportation  to  foreign  lands,  not  for  home  use.  In  time 
foreign  labor  would  become  intelligent  and  so  inventive,  under 
the  same  conditions  which  have  made  us  intelligent  and  inventive. 

The  truth  is  simply  this:  Free  trade  is  the  highest  form  of 
protection  to  labor  and  capital  in  all  the  rest  of  the  world,  while 
it  ruins  us.  The  highest  civilization  always  costs  the  most,  and 
the  people  of  every  country  have  just  what  their  wages,  or  the 
income  of  their  labor,  will  buy  for  them,  measured  in  the  stand- 
ard purchasing  power  of  the  world.  Commercially  mankind  are 
a  unit  and  nothing  on  earth  can  prevent  it  and  such  they  will  re- 
main. There  is  no  escape  from  the  laws  of  trade.  The  man  who 

005 


gets  five  cents  a  day  lives  like  a  dog,  or  worse,  because  he  has 
nothing  to  buy  a  better  life  with,  and  if  he  gets  no  work  at  all,  he 
dies.  There  are  gradations  in  the  condition  of  mankind  just  be- 
cause there  is  more  work  to  be  done  in  some  countries  than  in 
others.  The  plant,  working  capital,  machinery,  etc.,  and  living 
labor  must  combine  in  order  that  there  may  be  work  in  a  pro- 
ducing sense,  and  a  farm  manufactures  food  just  as  much  as  a 
cotton  mill  manufactures  cloth.  The  cheapest  production  will 
command  the  market  provided  that  it  can  get  there,  and  nothing 
but  protection  can  keep  foreign  products  from  ours. 

The  American  market  is  the  best  in  the  world,  and  under 
free  trade  (which  is  what  this  whole  howl  that  the  "tariff  is  the 
mother  of  trusts"  is  after)  the  world  will  take  it  from  the  Ameri- 
can producer  unless  he  works  and  sells  just  as  cheaply  as  the  Ger- 
mans and  the  Japanese. 

If  American  laborers,  farmers  and  other  producers  want  the 
American  market,  they  have  got  to  protect  it,  that  is  keep  it  to 
themselves  by  a  tariff  so  high  that  the  foreigner  can  not  get  into 
it.  But  it  is  said  that  we  must  have  free  trade  in  raw  materials, 
in  order  that  we  may  meet  foreign  competitors  in  foreign  mar- 
kets, and  thus  build  up  our  foreign  commerce.  We  already  have 
free  trade  in  foreign  raw  material  for  the  manufacture  of  all  such 
materials  into  articles  for  exportation  to  any  foreign  market. 

The  rebate  clause  in  the  tariff  law  returns  from  the  treasury 
the  duty  paid  upon  the  foreign  raw  material  when  the  article  is 
exported.  That  keeps  our  capital  and  labor  employed  at  home, 
while  we  meet  our  foreign  competitior  on  equal  terms  in  every 
market  of  the  world. 

Where  now -is  your  argument  for  free  foreign  raw  materials? 
And  protection  still  takes  care  of  the  producer  of  ^American  raw 
materials  and  of  everything  else  American,  by  preserving  to  him 
intact  the  home  market  of  seventy-five  millions  of  the  most  highly 
civilized  people,  and  therefore  the  greatest  consumers  on  earth. 

In  fact  our  home  market  alone  is  worth  that  of  any  other 
three  hundred  millions  of  mankind. 

So  much  for  the  rebate  provisions  of  the  protective  tariff,  in 
which  I  feel  some  pride,  as,  so  far  as  I  know,  I  had  the  honor  first 
to  urge  their  adoption  as  a  general  law.  These  provisions  are 
the  only  secure  foundation  of  a  colossal  and  perpetual  foreign 
trade. 

Under  them  we  manufacture  the  wheat  of  Canada  at  Minne- 
apolis, and  sell  the  flour  in  Canada,  England,  or  anywhere  else  in 
the  world.  If  we  can  keep  our  laws  as  they  are  and  their  adminis- 
tration in  the  hands  of  those  who  believe  in  them,  and  who  are 

606 


not,  either  openly  or  secretly,  working  to  destroy,  then  the  future 
of  the  country  is  stable  and  full  of  hope.  If  we  cannot  do  this  the 
future  is  full  of  despair.  We  must  not,  we  cannot  trust  any  man 
or  party  that  is  doubtful  or  shaky  in  the  support  of  a  protective 
tariff,  or  of  our  existing  gold  standard  of  value.  The  contracts 
and  wages  of  the  world  have  long  been  made  and  are  now  meas- 
ured in  gold.  It  is  impossible  now,  or  for  years,  to  abandon  the 
protective  tariff  or  adopt  a  new  standard  of  values,  without  once 
more  destroying  business  and  dislocating  society.  Agitation,  or 
the  suspicion  that  there  may  be  agitation,  upon  these  points  by 
men  or  parties  in  power  destroys  confidence,  and  loss  of  confidence 
is  calamity. 

In  this  connection  Mr.  Blair  filed  two  short  papers  previously 
prepared  by  him  further  elucidating  the  relation  between  the 
tariff  and  trusts,  as  follows: 

I. 

It  is  frequently  observed  that  the  trusts  are  a  natural  develop- 
ment of  the  protective  tariff,  and  the  strong  prejudice  against  the 
evils  which  appear  to  be  flowing  from  them  is  used  as  an  argu- 
ment against  the  protective  system.  That  is  to  say,  the  existence 
of  the  trust  is  an  argument  for  free  trade.  The  ordinary  and  per- 
haps sufficient  reply  to  this  assertion  is  the  fact  that  the  trust 
exists  in  free  trade  countries  as  well  as  in  our  own.  This  fact  is  in 
itself  conclusive  that  the  trust  does  not  originate  in  protection. 
It  must  be  remembered  that  trusts  are  international  already,  and 
if  unrestrained  the  tendency  of  capital  to  combine  will  become 
worldwide.  Capital  will  combine  and  locate  industries  wherever 
in  the  world  conditions  are  most  favorable  to  cheap  production, 
and  naturally  will  go,  in  the  long  run,  to  those  points  where  labor, 
the  other  great  factor  in  production,  is  cheapest,  the  result  of 
which  will  be  that  the  laborer  must  follow  the  location  of  capital 
all  over  the  world,  in  order  to  find  employment  at  all.  The  ex- 
istence of  the  people  depends  upon  the  work  they  have  to  do,  and 
if  the  work  of  the  American  people  is  not  done  by  them,  they 
will  have  no  purchasing  power,  and  must  starve.  If  the  protective 
tariff  be  removed,  trusts  will  locate  American  capital  in  Canada, 
in  European  countries,  in  Asiatic  countries,  and  wherever  labor 
can  be  employed  at  the  lowest  prices. 

Perhaps  nine-tenths  of  the  productive  power  of  the  world  is 
in  machinery  and  improved  tools,  all  of  which  is  owned  by  capital, 
that  is  to  say,  by  trusts,  or  will  be  if  these  great  combinations 
continue  and  enlarge.  So  that  without  the  protective  system  to 
interpose  as  an  obstacle  to  the  bringing  of  outside  productions 

007 


to  the  markets  of  the  United  States^  it  will  be  impossible  for 
American  laborers  to  obtain  employment  at  all,  unless  their  wages 
be  reduced  to  the  level  of  the  cheap  labor  of  other  countries.  So 
far,  then,  from  the  existence  of  trusts  being  an  argument  for-  the 
abolition  of  the  protective  tariff,  the  protective  tariff  is  the  only 
thing  that  can  save  to  the  American  people  their  work,  which  is 
only  another  name  for  their  life,  and  their  status  of  civilization. 

Various  remedies  are  being  proposed  to  cure  the  evils  of  the 
trust  system,  and  the  wisdom  of  the  country  is  likely  to  be  con- 
centrated upon  them. 

I  do  not  feel  that  I  can  add  any  particular  light  to  the  subject. 
I  have  sometimes  thought  that  provisions  by  law  nullifying  con- 
veyances to  trusts,  made  with  the  understanding  that  while  they 
are  not  to  be  employed  in  production,  dividends  are  neverthe- 
less to  be  paid  upon  the  consideration  given  for  them;  that,  if 
such  conveyances  were  declared  by  law  to  be  illegal  and  void,  it 
would  do  more  to  end  these  combinations  than  anything  else. 
Such  conveyances  ought  certainly  to  be  deemed  against  public 
policy  because  there  is  little  difference  between  such  transfers  of 
property,  with  an  understanding  that  the  property  is  to  become 
useless  or  partially  useless,  and  the  transfer  of  the  property  with 
the  understanding  that  it  is  to  be  destroyed  by  fire ;  and  when  to 
this  is  added  another  understanding  that  the  community  is  to  be 
taxed  in  the  form  of  increased  prices  for  commodities  to  pay  in- 
come upon  this  useless  property,  there  can  be  no  doubt  that  the 
transaction  is  injurious  to  the  public,  and  should  be  made  void 
and  criminal  by  the  general  laws  of  the  land. 

I  am  inclined  to  think  that  the  application  of  this  principle 
would  end  the  whole  difficulty.  It  would  seem  to  be  easy  of  ap- 
plication, for  every  member  of  the  body  politic  would  be  injured 
by  the  increased  price  of  consumption,  and  would  have  the  right 
to  attack  such  a  conveyance  in  the  courts,  and  if  the  transaction 
were  made  a  criminal  offense  the  entire  force  of  the  community 
could  be  brought  to  bear,  as  in  the  case  of  other  crimes.  There 
are  many  establishments  in  various  par^s  of  the  country  which 
have  been  conveyed  to  trusts,  with  the  understanding  that  they 
should  not  be  used,  and  which  have  not  been  used  as  plants  for 
production  since  they  went  into  the*  possession  of  the  trusts,  and 
yet  this  idle  capital  receives  dividends  drawn  from  the  public  at 
large. 

I  do  not  much  fear  the  prolonged  continuance  of  these  abusive 
trusts,  for  I  believe  that  great  financial  disasters  will  follow  their 
general  introduction,  within  the  next  few  years,  which  will  be 
such  a  lesson  to  foolish  and  hasty  investors  that  the  system  will 


disappear  in  its  own  ruins.  The  best  way  to  cure  trusts  of  the 
evils  is  to  let  them  alone,  to  keep  out  of  them.  There  are  some 
good  things  about  them.  They  are  labor-saving  machines  in  a 
good  many  respects,  but  what  good  there  is  in  them  can  be  applied 
under  our  old  system  of  competitive  production. 

II. 

The  most  objectionable  trusts  originate  in  the  efforts  of  the 
owners  of  unprofitable  plants  to  save  themselves  by  combination 
with  others.  It  would  seem  to  be  a  complete  answer  to  the 
proposition  that  protection  is  the  mother  of  trusts,  that  trusts 
exist  in  free  trade  countries  as  well  as  in  this,  where  protection 
prevails,  and  that  the  principal  trusts  of  our  own  country  are 
not  dependent  on  protection  for  their  existence  or  for  their 
growth.  The  product  of  the  "Standard  Oil  Company  nor  the 
sugar  trust  itself  are  dependent  either  for  their  creation  or  for 
their  growth  upon  the  tariff.  The  attack  of  Mr.  Havemeyer  upon 
the  tariff  is  easily  explainable  upon  the  ground  that  the  interests 
of  his  trust  would  be  promoted  by  a  diminution  of  protection, 
and  probably  still  more  promoted  by  absolute  free  trade  in  sugar; 
and  in  the  long  run  still  more  promoted  by  absolute  free  trade. 

You  may  be  sure  that  if  the  tariff  was  the  mother  of  trusts, 
that  trusts  would  not  be  attacking  the  tariff,  but  this  is  not  in 
my  mind  the  real  argument  of  the  case. 

The  leading  trusts  are  already  international.  Their  capital 
is  invested  everywhere.  Naturally,  they  will  seek  the  other  great 
element  of  production,  that  is  to  say,  labor,  where  it  is  cheapest. 
If  the  protective  tariff  is  removed  so  that  production  outside  the 
limits  of  our  country  can  reach  our  markets,  capital  will  inevita- 
bly be  invested  where  that  cheaper  labbr  is  to  be  found,  and  the 
work  of  the  American  people  would  come  to  be  done  by  the 
laborers  of  foreign  lands  unless  the  American  people  are  con- 
tented with  a  wage  such  as  that'  of  England,  the  continent,  or  of 
Asiatic  laborers,  that  is  to  say,  the  cheapest  labor  in  the  world 
wherever  it  may  be  found. 

Nothing  can  protect  the  American  people  in  their  work  but 
the  tariff.  Eemove  it,  and  the  destruction  of  our  industries 
would  be  sure.  The  trusts,  so  far  as  they  merely  employ  great 
masses  of  capital  in  legitimate  competitive  production  cannot  be 
objected  to.  The  great  abuse  connected  with  them  seems  to  me 
to  be  the  fact  that  they  seek  to  destroy  competition  by  combina- 
tion of  unprofitable  plants,  which  they  design  to  close  up,  and 
substantially  destroy,  with  those  which  are  retained  for  active 
production,  and  guarantee  returns  upon  this  idle  capital,  to 

609 


obtain  the  money  to  pay  which  they  must  unduly  tax  the  com- 
munity in  prices  unnaturally  high.  Having  destroyed  competi- 
tion, the  trust  is  enabled  to  fix  the  prices  of  commodities  so  as 
to  yield  returns  upon  this  idle  capital.  Idle  property  is  no  longer 
property,  and  to  pay  an  income  upon  it  somebody  must  be  robbed. 
If  non-productive  it  should  be  sold  for  what  it  will  bring  and 
put  into  some  new  and  active  form. 

Combinations  of  this  description  must  be  against  public  pol- 
icy. If  conveyances  which  have  been  made  in  the  past  are  valid 
because  there  is  no  public  law  against  them,  certainly  new  laws 
could  now  be  enacted  which  would  declare  such  future  convey- 
ances illegal  and  void,  and  if  in  the  future  such  conveyances  were 
declared  illegal  and  void  ab  initio,  I  believe  that  evil  would  cease. 
Such  conveyances  and  guarantees  of  returns  upon  idle  capital 
could  be  prohibited  by  suitable  penalties,  and  as  the  offense  is 
in  its  nature  public,  every  individual  in  the  community  would 
have  the  right  to  set  in  motion  the  remedy. 

It  would  be  found  impossible  perhaps  without  new  legislation 
to  prevent  the  conveyances  which  until  now  have  constituted  the 
initiation  of  trusts  and  are  the  very  basis  of  the  whole  system. 
Such  legislation  would  not  interfere  with  legitimate  investment 
and  the  employment  of  great  masses  of  capital  in  productive 
enterprises.  Thus  we  should  get  the  benefit  of  gigantic  combina- 
tions of  labor  and  capital  without  destroying  naturally  healthy 
competition.  The  so-called  trust,  when  organized  and  managed 
in  accordance  with  just  business  principles,  is  simply  the  idea 
of  the  labor-saving  machine  carried  into  business  methods  and 
affairs,  and  I  believe  that  the  objection  to  the  trust  system  as 
an  improvement  in  business  methods,  thus  saving  time  and  ex- 
pense in  production,  can"  be  just  as  legitimately  urged  against 
new  improvements  in  labor-saving  machinery.  The  thing  is  to 
find  a  true  line  of  action,  which  will  save  to  us  all  the  benefits 
of  the  trusts  in  business  methods  and  management,  without 
yielding  to  the  tendency  to  abuse  the  law  and  the  interests  of 
society  by  ripening  the  system  into  gigantic  monopolies.  Like 
every  other  improvement  and  good  thing  the  trust  is  liable  to 
abuses,  and  without  proper  restraint  and  wise  legislation,  and 
the  continual  vigilance  of  society  it  is  sure  to  develop  them.  But 
to  refer  again  to  the  main  point,  as  I  said  in  the  beginning,  trusts 
are  already  international.  More  and  more  they  will  own  the 
capital  which  does  the  business  of  the  world,  and  all  the  machin- 
ery, which  is  but  another  form  of  capital. 

Inevitably,  then,  they  will  seek  the  cheapest  labor,  for  capital 
and  machinery  are  in  their  nature  portable,  and  will  go  where 

610 


the  cheapest  labor  is  to  be  found.  It  is  clear  that  the  tariff,  in- 
stead of  being  the  occasion  of  trusts,  is  our  only  protection  against 
them.  One  thing  is  very  sure — the  trusts  would  never  assail  their 
own  mother. 

In  conclusion  Mr.  Blair  presented  the  following  resolutions 
which  he  had  proposed  to  offer  for  the  consideration  of  the  con- 
ference had  it  been  decided  to  formulate  resolutions  expressing 
its  sentiments.  As  it  had  been  decided  not  to  do  this,  he  desired 
that  they  be  printed  simply  as  a  part  of  his  remarks,  and  mere 
personal  suggestions. 

Eesolved,  That  all  artificial  persons  known  as  partnerships, 
corporations,  trusts,  and  all  combinations  of  like  nature,  which 
may  compete  in  business  with  individual  men,  should  be  created 
and  should  be  permitted  to  exist  only  by  the  supreme  power  of 
the  state,  or  nation,  within  whose  jurisdiction  they  may  operate, 
and  with  care  to  so  limit  and  control  the  same  in  duration,  cap- 
ital, sphere  and  methods  of  action,  and  in  all  other  respects,  as 
not  to  injure  but  rather  to  promote  the  general  welfare. 

Eesolved,  Whenever  such  artificial  person  is  created  which 
is  to  operate  outside  the  limits  of  the  state  of  its  origin,  it  should 
be  made  subject  to  supervision  and  control  by  the  sovereignty 
of  the  nation  and  of  any  state  in  which  it  shall  transact  business, 
and.  to  this  end,  and  that  there  may  be  no  longer  any  doubt  of 
its  jurisdiction,  we  hold  that  the  national  constitution  should  be 
amended  so  as  expressly  to  confer  such  jurisdiction. 

Eesolved,  Whenever  such  artificial  person  shall  have  violated 
any  of  the  conditions  upon  which  life  was  given  to  it,  that  life 
should  be  taken  away  by  the  power  which  gave  or  controls  it, 
and  its  property  and  franchises  disposed  of  by  law;  while  the 
individuals  composing,  controlling,  or  responsible  for  the  con- 
trol of  such  artificial  person,  should  at  all  times  be  held  to  rigid 
accountability,  both  civilly  and  criminally,  as  private  individuals 
in  like  cases  are  held  by  the  laws  of  the  land. 

Eesolved,  We  demand  of  the  government,  both  in  the  nation 
and  in  the  several  states,  the  most  rigid  scrutiny  and  control  of  all 
artificial  persons,  the  function  of  which  is  to  develop  and  handle 
the  primal  resources  of  the  earth,  and  of  those  great  lines  of 
transportation  which  distribute  to  the  consumer  the  tremendous 
productions  of  American  agriculture  and  the  commodities  of  our 
marvelous  manufacturing  skill,  to  the  end  that  everywhere  the 
evils  of  monopolistic  combinations  may  be  rooted  out,  exposed 
and  destroyed. 

Eesolved,  We  recognize  in  full  the  rights  of  organized  labor, 

611 


and  would  still  further  increase  them  and  their  sphere  of  peace- 
ful operation.  We  have  no  sympathy  with  that  theory  which 
classifies  and  confounds  these  organizations,  existing  only  to 
enable  the  individual  man  to  preserve  his  power,  capacity  and 
opportunity  to  lahor,  with  his  hands,  in  order  that  himself  and 
family  may  at  least  exist,  and  if  possible,  better  their  condition, 
as  being  the  same  in  nature  with  those  gigantic  artificial  com- 
binations which  operate  inanimate  machines,  dispensing  with  the 
living  labor  as  much  as  possible,  by  means  of  the  wealth  which 
the  laborer  has  already  created  by  the  sweat  of  his  brow,  and  con- 
tinues to  pour  out  that  he  may  barely  live,  while  the  combination 
thrives.  But  in  co-operation,  arbitration,  and  the  free  adjust- 
ments growing  out  of  increasing  mutual  respect  and  good  will, 
we  hail  the  glad  assurance,  for  both  the  laborer  and  the  employer, 
of  a  happier  day. 

Resolved,  That  the  protective  tariff  is  not  the  mother  of  trusts, 
but  the  protective  tariff  is  the  mother  of  American  wealth  and 
power. 

Resolved  further,  That  the  protective  tariff  is  the  only  means 
by  which  the  American  people  can  protect  themselves  against  the 
most  dangerous  of  all  trusts,  which  is  the  international  trust,  and 
can  also  preserve  to  themselves,  against  all  competition,  their 
own  market  for  the  results  and  rewards  of  their  own  work,  thus 
avoiding  the  destruction  of  their  prosperity,  independence,  man- 
hood, and  civilization. 


GEORGE  A.  SCHILLING. 

Ex-Secretary  Hureau  of  Labor  Statistics  of  Illinois. 

It  has  been  remarked  by  Mr.  Cockran  that  in  his  judgment 
before  another  conference  of  this  character  shall  take  place,  that 
a  majority  of  the  trust  employers  of  the  United  States  will 
have  associated  with  them  their  wageworkers  as  official  partners 
in  their  business ;  that  is  to  say,  they  will  be  admitted  to  repre- 
sentation upon  their  boards  of  directors.  This,  according  to  Mr. 
Cockran,  would  be  simply  giving  an  official  recognition  of  the 
partnership  which  already  exists  in  fact  between  the  employer 
and  the  employee. 

I  am  myself  a  member  of  a  labor  union,  though  not  officially 
representing  one  here,  but  in  my  judgment,  if  this  consolidation 
between  the  labor  unions  and  the  "trusts  is  ever  consummated,  it 
will  be  for  one  of  two  reasons:  First,  either  because  organized 

612 


labor  will  demand  recognition  and  organized  capital  will  be  too 
weak  to  resist  the  demand,  or  secondly,  because  the  trusts  fear 
that  they  cannot  continue  to  perpetrate  grand  larceny  upon  the 
public  unless  they  take  the  labor  organizations  in  with  them. 
There  will  be  no  humanity  about  it;  no  sentiment  nor  brotherly 
love  whatever.  It  will  be  a  cold  matter  of  business. 

But  I  did  not  rise  for  the  purpose  of  further  inflaming  you, 
but  rather  to  make  clear  the  problem  and  to  see  to  what  extent 
some  of  the  fog  which  has  been  diffused  on  all  sides  may  be  dis- 
pelled. Generally  speaking,  there  are  two  divisions  in  this  con- 
vention; closer  sifting  would  classify  them  into  four  or  five,  but 
there  are  primarily  two.  One  division  consists  of  those  that  do 
not  want  the  trusts  to  be  interfered  with  at  all,  while  the  other 
wishes  to  deal  with  the  problem  through  restrictive  legislation. 
Now,  in  order  to  determine  whether  the  trust  shall  be  interfered 
with  at  all,  and  how,  we  ought  first  to  find  out  the  difference 
between  the  capitalistic  trust  and  the  trust  known  as  the  labor 
union,  and  I  think  if  we  can  clearly  determine  the  difference 
between  the  two  we  will  have  some  light  to  guide  us  on  our  way. 

Now,  the  workingman  in  any  craft  realizes  that  standing  alone 
in  the  presence  of  modern  economic  forces,  he  would  be  annihi- 
lated and  would  stand  no  show  to  make  any  agreement  satisfactory 
to  himself,  therefore  he  joins  himself  unto  his  fellow- workmen 
and  multiplies  his  power  through  the  law  of  association,  and  in 
the  character  of  this  composite  man  he  stands  in  the  labor  world 
with  sufficient  influence  to,  at  least  in  a  degree,  determine  the 
conditions  under  which  he  shall  be  employed. 

The  capitalistic  corporations  contending  against  unfavorable 
conditions,  likewise  look  about  and  ask  what  can  be  done  to  get 
rid  of  the  wasteful  and  injurious  methods  of  business,  and  they, 
too,  invoke  the  law  of  association,  and  begin  to  consolidate  all 
the  allied  interests  in  their  line. 

Now,  up  to  this  point,  there  is  absolutely  no  difference  in  the 
character  of  the  organization  of  labor  and  the  organization  of 
capital.  Both  are  utilizing  their  power  to  associate — an  attribute 
that  God  has  given  to  man  to  a  greater  degree  than  to  any  other 
thing  that  walks  or  creeps  on  this  earth.  But  right  here  the  sim- 
ilarity ends,  and  the  paths  diverge.  It  is  this  difference  in  char- 
acter which  these  two  organizations  at  this  point  assume  that  ex- 
poses "the  negro  in  the  woodpile"  and  justifies  public  interference 
with  the  capitalistic  trust,  but  does  not  justify  similar  interference 
with  the  labor  organization. 

I  have  said  that  up  to  this-  point  both  capital  and  labor  aug- 
ment and  multiply  their  power  many  fold  solely  through  the  law 

613 


of  association;  but  the  workingman  has  nothing  but  this  law  to 
aid  him,  whereas  capital  has  all  of  its  advantages  plus  all  of  the 
monopolies  which  are  conferred  through  special  privileges  that 
give  additional  power  and  strength  to  the  trust.  And  it  is  he- 
cause  of  this  that  Mr.  Cockran  in  his  otherwise  very  able  speech, 
was,  in  my  judgment,  so  fallacious,  when  illustrating  in  the  man- 
ufacture of  his  chair  his  self-acting,  unvarying  law  by  which 
wages  were  distributed  regardless  of  the  power  or  influence  of  the 
trades  union.  Had  Mr.  Cockran  taken  an  industrial  society  en- 
tirely devoid  of  special  privileges,  then  he  would  have  proven  his 
case.  But  he  assumed  that  the  law  by  which  wages  are  distributed 
operated  now  in  that  unvarying  and  equitable  way. 

Let  us  suppose  that  there  is  a  train  of  cars  loaded  with  grain 
to  be  dumped  through  a  chute  into  this  building  and  that  this 
chute  is  made  so  tight  that  every  particle  of  grain  that  goes  in 
at  one  end  will  surely  be  deposited  at  the  other,  there  is  then  no 
flaw  from  the  point  where  the  grain  is  received  to  the  point  where 
it  is  deposited.  But  suppose  instead  of  being  perfectly  tight  this 
chute  had  several  holes  in  it  known  as  special  privileges  through 
which  from  25  to  50  per  cent  of  the  grain  would  leak  while  in 
transit.  Now,  anyone  can  see  that  under  such  circumstances  you 
cannot  divide  any  more  grain  at  the  final  point  of  deposit  than 
reaches  it.  That  there  are  such  holes  through  which  industry  is 
despoiled  no  thoughtful  person  will  deny.  They  are  the  monop- 
olies of  tariffs,  franchises  of  public  utilities,  money,  patents  and 
land — and  it  is  the  possession  of  these  special  privileges  by  the 
capitalistic  trust  that  justifies  public  interference. 

But  I  am  not  in  favor  of  restrictive  legislation.  Instead  of 
"Be  it  enacted,"  I  would  prefer  to  solve  the  problem  by  "Be  it 
repealed."  The  restrictive  legislation  enacted  within  the  past 
thirty  years  against  corporate  wealth  has  not  brought  the  results 
intended.  Contrariwise,  in  many  instances  these  enactments 
have  been  employed  for  the  suppression  of  the  masses.  The  belief 
that  our  industrial  ills  can  be  cured  by  filling  our  statute  books 
with  restrictive  legislation,  is  delusive,  yet  everywhere  this 
tendency  is  taking  shape,  and  everywhere  it  fails  to  remove 
the  evils  complained  of.  Instead  of  cutting  the  Gordian 
knot  of  monopoly  and  allowing  the  full  play  of  industrial 
forces  to  liberate  man  from  his  thralldom,-  prohibitory  legislation 
is  relied  upon  as  the  panacea.  Instead  of  crushing  the  head  of 
the  serpent — monopoly — that  poisons  all  the  streams  of  our  in- 
dustrial and  political  life,  we  give  it  full  sway  and  then  consume 
large  quantities  of  restrictive  legislation  as  a  means  of  neutraliz- 
ing the  poison.  The  result  is  that  society  and  industry  are  being 

614 


tied  up  in  an  inextricable  tangle.  Bather  than  to  continue  thus 
1  should  prefer  to  take  out  from  under  these  trusts  the  props 
of  special  privileges  that  give  them  this  undue  power  to  fleece 
the  public. 

First  of  all,  I  wpuld  repeal  the  entire  tariff  laws  and  place 
the  United  States  upon  an  absolutely  tree  trade  basis  with  all 
the  world.  This  would  compel  us  to  revise  our  entire  fiscal  sys- 
tem, in  the  remodeling  of  which  we  might  place  many  of  the 
burdens  where  they  properly  belong.  It  would  even  give  the 
Single  Taxers  an  opportunity  to  present  their  views,  and  if  en- 
acted into  law  would  rob  landlordism'  of  its  power. 

I  would  repeal  the  10  per  cent  tax  on  banks  of  issue,  and 
the  national  banking  laws,  and  would  make  the  issuing  of  money 
as  free  as  the  air. 

While  I  am  not  clear  as  to  the  utility  of  repealing  all  of  the 
patent  laws,  I  believe  that  the  time  permitted  under  the  present 
laws  coulcl  be  reduced  one-half  to  the  general  benefit  of  the 
public. 

F.  E.  HALEY. 

Secretary  Iowa  State  Traveling  Men's  Association. 

The  commercial  travelers  of  the  United  States  almost  to  a 
man  are  decidedly  against  trusts  and  trade  combines.  In  fact, 
I  might  state  with  accuracy,  the  people  in  general  are  opposed 
to  the  combinations  that  have  been  capitalizing  themselves  with 
the  sole  view  of  enriching  the  few  at  the  expense  of  the  masses. 
Trusts  are,  in  my  opinion,  a  menace  to  the  people.  Their  prin- 
cipal object  is  that  the  army  of  consumers  should  pay  tribute  to 
the  few.  They  should  be  placed  under  federal  control,  but  the 
law  enacted  to  bring  about  this  state  of  affairs  should  be  straight- 
forward and  not  evasive,  as  it  seems  to  be  at  the  present  time. 
A  constitutional  amendment,  clearly  defining  the  rights  of  the 
capitalists  as  well  as  to  protect  the  purchasers  or  consumers, 
would  be  productive  of  the  most  good  to  the  greatest  number. 
It  is  self-evident  that  trusts  are  looked  upon  with  mistrust  by 
the  wage-earner  and  common  people..  If  such  is  the  case, 
just  to  such  an  extent  are  trusts  a  menace  to  the  interest  of  the 
country.  The  question  of  trusts  and  trade  combines,  by  con- 
centrating the  wealth  of  the  country  into  the  hands  of  the  few, 
is  and  has  been  producing  discontent  for  the  past  year.  Hence, 
a  readjustment  of  affairs  in  the  near  future  is  absolutely  neces- 
sary in  order  that  the  business  interests  of  the  country  may  be 
put  upon  a  calm  and  businesslike  basis. 

615 


HENKY  W.  PEABODY. 

Merchant,  Boston. 

Combinations  bear  most  heavily  upon  the  individual  pro- 
ducer, or  the  middleman,  who  before  constituted  the  machinery 
of  business.  Large  numbers  of  heretofore  active  and  successful 
producers,  tradesmen  and  agents  are  being  frozen  out  of  business 
by  the  combinations,  and  opportunities  to  build  up  anew  with 
small  capital  are  very  hard  to  find  in  any  department. 

I  regard  very  seriously  the  advancing  strides  of  combinations, 
especially  the  joining  of  already  colossal  capital  with  other  mul- 
timillions,  and  in  one  interest  producing  the  raw  material,  and  its 
manufacturers  and  also  utilizing  it  in  structural  work.  Such 
monopolies  by  the  already  rich  tend  to  make  the  very  rich  richer, 
and  those  before  well  off,  poorer,  as  their  opportunities  are  shat- 
tered. 

A  monopoly  which  appropriates  to  itself  all  the  benefits  of  its 
economies  and  capital,  and  establishes  high  prices  unduly,  will 
make  no  friends  in  the  community. 

So  far  only  as  combination  can  produce,  and  so  can  sell  more 
cheaply  than  an  individual  manufacturer,  it  may  be  able  to  better 
compete  with  other  countries  for  the  world's  trade,  but  the  com- 
petition would  be  more  national,  and  in  accord  with  trade  cus- 
toms, in  the  hands  of  the  larger  number  of  producers,  bidding 
against  each  other. 

There  is  a  tendency  in  foreign  as  well  as  domestic  trade  for 
combination  to  dispense  with  the  middlemen,  the  jobber,  the  mer- 
chant. 

Labor  organizations  can  only  be  regarded  as  the  counterpart  of 
the  combinations  of  capital,  when  their  power  is  violently  ap- 
plied in  strikes  to  compelling  or  demanding  better  wages,  when 
they  are  a  menace  to  society.  .  At  other  times  they  are  useful  to 
protect  the  rights  of  wage  earners  who  as  individuals  are  not  in- 
fluential. Labor  organizations  will  naturally  be  opposed  to  trusts, 
as  employers  having  increased  power,  and  including  the  element 
of  large  capital.  The  labor  organizations  are  often  useful  to  all 
employers,  in  so  far  as  they  establish  uniformity  of  wages  and 
hours  of  labor. 

There  is  a  tendency  of  the  rapid  growth  of  trusts  and  com- 
binations to  create  new  allies  to  the  organized  labor,  in  the  thou- 
sands of  men  of  business  who  are  being  thrown  out  of  all  busi- 
ness by  the  absorption  of  their  establishment  or  inability  to  profit- 
ably continue  or  to  apply  moderate  capital  in  a  new  enterprise. 
The  large  numbers  of  these  joined  classes  will  constitute  a  power- 

616 


ful  agency  in  opposition,  to  the  trusts,  for  the  shaping  of  legisla- 
tion, or  in  the  exercise  of  the  franchise. 

The  contention  of  labor  and  the  unemployed  with  great  wealth 
and  combined  production  ought  not  to  be  a  political  issue,  but 
there  is  danger  that  it  will  assume  that  form. 


EMEESON  McMILLIK 

Banker,  New  York. 

Emerson  McMillin  said  in  part: 

Combination  will  decrease  cost  of  production.  It  will  benefit 
society  in  this,  that  it  will  tend  to  do  away  with  spasmodic  and 
extreme  advances  in  prices,  followed  by  long  periods  of  depres- 
sion and  the  discontent  of  the  masses  incident  thereto. 

The  consumer  and  the  laborer  should  be  the  chief  beneficia- 
ries. By  combination  a  solidity  is  given  to  investments  that 
makes  the  investor  content  with  smaller  net  returns: 

In  many  instances  the  share  capital  issued  is  ridiculously  large. 
The  excess  of  engraved  sheets  of  paper  can  profit  no  one,  and  it 
may  be  a  source  of  danger  to  uninformed  investors,  and  in  times 
of  depression  the  collapse  of  these  excessively  capitalized  com- 
panies will  tend  to  create  alarm  and  distrust  in  the  financial  sys- 
tem of  the  country. 

Wages  ought  to  be  higher,  owing  to  absence  of  ruinous  com- 
petition and  consequent  disposition  of  employer  to  reduce  ex- 
penses. The  condition  of  the  wage-earner  should  be  improved. 
Eegular  employment  at  fair  wages  is  what  the  wage-earner  desires, 
and  is  essential  to  his  contentment. 

I  am  not  clear  in  my  own  mind  as  to  result  with  middlemen. 
But  even  if  disastrous,  that  fact  should  not  condemn  combina- 
tions if  the  general  result  is  "the  greatest  good  to  the  greatest 
number."  The  change  must  come  slowly,  if  at  all,  and  middle- 
men will  adjust  their  affairs  to  changed  conditions.  This  has 
always  occurred,  and  will  continue  to  occur  so  long  as  civiliza- 
tion progresses. 

I  do  not  regard  the  tendency  to  combination  with  any  appre- 
hension on  the  ground  that  it  does  or  may  create  monopolies  con- 
trary to  the  general  welfare.  But  to  quiet  any  apprehension  in 
that  direction  there  ought  to  -be  national  legislation.  If  the 
general  government  can  assume  control  of  a  bankrupt's  affairs 
and  discharge  his  debts,  it  can  protect  him  from  being  driven  to 
bankruptcy  by  the  strong. 

617 


Patents  are  monopolies;  much  of  the  prosperity  of  our  coun- 
try is  due  to  our  patent  laws.  •  Gas,  electric  light  and  street  rail- 
ways are  practically  monopolies  in  most  cities.  The  public  would 
profit  by  making  them  absolute  monopolies  as  they  are  in  a  large 
measure  in  England.  The  strongest  argument  in  favor  of 
"municipal  ownership"  is  the  fact  that  all  possible  competition 
is  destroyed  and  duplication  of  capital  prevented. 

Combination  will  benefit  this  country  in  competition  with 
other  nations  for  the  world's  trade.  Goods  can  be  produced 
cheaper  and  excess  unloaded  on  foreign  markets  at  cost,  if  neces- 
sary, to  prevent  shutting  down  works  in  America. 

Ways  in  which  combinations  may  and  will  injure  the  public 
will  doubtless  develop  during  the  next  few  years.  None  occur 
to  me  now. 

It  will  be  a  serious  mistake  to  recognize  "class"  in  any  form. 
Labor  organizations  or  combinations  should  be,  in  the  eyes  of 
the  law,  the  same  as  combinations  of  capitalists.  Labor  organiza- 
tions are  right  and  absolutely  essential  to  the  preservation  of  the 
rights  of  labor.  This,  of  course,  in  general  and  not  applying  to 
particular  cases.  These  unions  should  have  the  same  lawful  pro- 
tection as  is  given  to  incorporated  capital.  Their  efficiency  would 
be  greatly  augmented  if  they  were  managed  in  about  the  same 
way. 

Quite  positive  legislation  must  be  had  by  Congress.  Utter 
confusion  will  result  if  states  are  depended  on  for  protective  legis- 
lation. Again,  state  legislatures  are  governed  by  local  preju- 
dices. In  one  state,  at  least,  it  is  now  lawful  for  the  farmer  and 
the  stock  raiser  to  form  combinations,  but  illegal  for  the  mer- 
chant, the  miner  or  the  manufacturer  to  do  so. 

JAMES  W.  ELLSWOKTH. 

Merchant,  New  York. 

The  combining  of  producing  agencies  will  decrease  cost  of 
production  and  therefore  be  beneficial. 

The  amount  of  decrease  in  cost  of  production  should  increase 
as  progression  is  made  under  the  proposed  changed  conditions, 
the  combining  of  producing  agencies  resulting  in  lessening  the 
cost,  the  same  as  labor-saving  machinery  has  accomplished. 

Eegarding  combinations  as  employers  of  labor,  and  what 
should  be  the  effect  on  wages  or  the  condition  of  the  wage  earner, 
I  think  the  result  should  be  beneficial.  The  proposition  is  sim- 
ilar to  the  question  that  was  raised  when  labor-saving  machinery 
was  first  introduced,  and  the  protest  of  labor  still  comes  to  the 

618 


surface  as  advancement  in  this  direction  is  made — that  labor  will 
be  crowded  out  of  employment.  The  opposite  has  been  the  result. 
On  account  of  labor-saving  machinery  the  cost  of  production  has 
been  reduced,  thereby  multiplying  the  demand,  and  in  place  of 
lessening  the  demand  for  labor,  the  effect  is  to  increase. 

Combination  of  similar  interests  will  cheapen  the  cost  of  the 
commodity,  and,  as  in  all  cases  where  radical  change  is  made,  the 
individual  must  give  way  to  the  principle.  Many  employees  will 
be  thrown  out  of  work,  but  it  will  be  for  the  reason  that  their 
labor  is  not  required  and  therefore  wasted,  or  a  tax  on  the  public. 
New  fields  will  be  created,  on  account  of  the  changed  conditions, 
which  Avill  give  adequate  employment  at  remunerative  wages; 
believing  as  I  do  that  on  account  of  the  changes  that  are  no^v 
working  out  in  this  connection,  products  will  be  so  cheapened 
that  it  will  open  up  new  markets  at  home  and  abroad,  resulting 
in  a  prosperity  to  this  country  that  has  never  been  equaled  before 
in  the  world. 

In  individual  cases  monopoly  may  result,  but  it  will  be  at  the 
expense  of  success  to  the  interest  so  managed,  and  which  will  be 
readily  demonstrated,  as  the  greatest  gain  accruing  to  both  em- 
ployer and  employee  comes  by  cheapening  the  cost  of  produc- 
tion, thereby  multiplying  the  output. 

I  do  not  regard  labor  organizations  as  being  in  the  same  cate- 
gory with  other  forms  of  combination.  Labor,  as  at  present 
organized,  destroys,  while  capital  is  creative.  When  labor  organ- 
izes with  the  same  idea  that  actuates  capital — for  the  purpose  of 
obtaining  solely  better  results,  discarding  all  thought  of  coercion 
and  taking  into  consideration  simply  supply  and  demand,  both 
labor  and  the  product  created  by  capital  and  labor  (when  produc- 
tion is  oversupplied  curtail  in  every  way  possible,  husbanding  the 
resources,  and  when  changed  conditions  come,  expand),  then  the 
laborer  will  own  his  own  home  and  peace  and  happiness  will  sur- 
round his  fireside. 

Legislative  action  is  desirable  for  the  purpose  of  preventing 
extortion  and  coercion.  Eightful  combination  of  interests  will 
cheapen  production  to  that  extent  that  there  should  be  no  fear 
of  non-competition,  and  such  laws  should  be  enacted  as  will  pro- 
tect any  individual  or  combination  of  individuals  from  persecu- 
tion ;  it  being  my  belief  that  if  the  latter  protection  is  given  there 
will  be  no  danger  of  extortion,  except  in  rare  cases  where  there 
is  an  absolute  monopoly,  and  then  legislative  protection  should 
also  be  given. 


619 


CHARLES  J.  BONAPARTE. 

Attorney,  Baltimore,  Mil. 

I  regard  the  tendency  of  combination  as  an  inevitable  feature 
of  modern  civilization  from  which  no  free  and  enlightened  coun- 
try can  escape,  and  which  has  force  in  proportion  to  each  coun- 
try's freedom  and  enlightenment.  It  does  not  follow  from  this 
that  I  regard  it  as  a  good  thing,  for  I  consider  it  a  complete  fal- 
lacy that  all  the  changes  brought  about  by  modern  civilization 
have  been  for  the  better;  not  a  few  of  them  are,  to  my  mind,  dis- 
tinctly harmful.  I  am  not,  however,  prepared  to  say  that  this 
tendency  is  harmful ;  it  has  a  good  side  and  a  bad  side,  and  there 
is  the  less  reason  to  make  up  our  minds  as  to  its  merits,  because, ' 
whatever  we  may  think,  we  cannot  prevent  it,  except  at  the  price 
of  liberty  and  civilization.  There  is  an  antidote  to  its  excess  in 
the  fact  that,  as  a  business  enterprise  may  be  on  too  small,  so 
this  may  be  on  too  large  a  scale  to  be  profitable;  the  difficulty 
and  consequent  cost  of  effective  supervision  become,  when  a 
certain  stage  of  growth  has  been  reached,  too  great  for  the 
attendant  profits,  and,  usually,  although  not,  perhaps,  always, 
this  point  will  be  reached  before  a  seriously  injurious  monopoly 
can  be  created.  .As  the  tendency  is  in  no  wise  confined  or  peculiar 
to  this  country,  but  exists  in  all  the  more  advanced  foreign  na- 
tions, it  does  not  seem  to  me  likely  to  injuriously  affect  our  com- 
parative commercial  standing,  although  it  can  hardly  benefit  this. 
In  this  connection  it  must  be  remembered  that  there  are  already 
international  combinations  of  capitalists,  as  well  as  of  laborers, 
and  that  the  former,  at  all  events,  seem  likely  to  greatly  increase 
in  number.  There  are,  however,  two  points  at  which  the  forma- 
tion of  combinations  affects  the  public  interest  injuriously,  in 
my  opinion.  As  a  matter  of  convenience,  although  not  of  neces- 
sity, it  often  involves  the  aid  of  the  legislative  power,  national, 
state  or  municipal,  and  thus  debauches  our  public  men  and  intro- 
duces a  deplorable  element  of  venality  and  corruption  into  our 
politics.  Moreover,  through  the  natural  jealousy  with  which  such 
"combinations"  are  regarded  by  the  laborers  whose  interests  they 
affect,  their  formation  furnishes  a  theme  for  declamation  and 
consequent  profit  to  a  class  of  insincere,  unscrupulous  and  gen- 
erally ignorant  demagogues,  inflames  class  prejudices  and  favors 
the  spread  of  socialistic  and  other  false  and  mischievous  doc- 
triaes. 

Labor  organizations  resemble  what  are  commonly  known 
as  trusts  (a  very  inaccurate  and  misleading  name,  by  the  way) 

620 


in  that  they  constitute  organizations  designed  to  advance  the 
price  of  the  stock-in4rade  of  their  members  by  shutting  out  com- 
petitors from  the  market;  but  their  advantages  and  disadvan- 
tages to  the  community  are  both  altogether  different  from  those 
of  the  trusts,  and,  while  I  am  neither  a  blind  admirer  nor  a 
fanatical  enemy  of  either,  I  do  not  think  they  can  be  satisfactorily 
thought  of  or  dealt  with  under  the  same  category. 

I  think  the  consolidation  or  combination  of  railway  companies 
into  large  systems  has  been  shown  by  experience  to  be  desirable. 

If  concentration  is  carried  so  far  as  to  create  a  practical 
monopoly  of  the  product,  the  cost  of  production  may  be  further 
decreased  from  the  facts  that  the  combination  will  become  the 
only  purchaser  of  the  raw  material  and  the  only  employer  of  the 
specially  skilled  labor  needed  to  produce  this,  and  can  therefore 
bring  down  the  price  of  the  former,  and  the  wages  of  the  latter, 
indefinitely,  provided  it  stops  short  of  the  points  where  the  pro- 
duction of  the  raw  material  ceases  to  be  profitable  and  where  the 
labor  is  driven  into  other  forms  of  employment.  If  a  combina- 
tion of  producing  agencies  means,  or  includes,  a  combination  of 
laborers,  as  in  a  trade  union  or  a  federation  of  such  unions,  the 
result  of  such  a  combination,  in  so  far  as  it  affects  the  cost  of  pro- 
duction, must  be  to  increase  this,  since  its  purpose  and  tendency 
is  to  raise  the  wages  of  the  labor  employed. 

The  consumer  will,  other  things  being  equal,  profit  by  a  de- 
crease in  the  cost  of  production,  whenever  there  is  free  competi- 
tion among  producers  in  the  market.  If,  therefore,  the  combi- 
nation of  producing  agencies  does  not  affect  the  freedom  of  com- 
petition, the  consumer  will  benefit  by  the  reduction  in  the  cost 
of  production  thereby  caused ;  if  the  combination  creates  a  virtual 
monopoly,  the  consumers  will  not  ordinarily  benefit  by  the  de- 
crease of  cost;  on  the  contrary,  the  tendency  of  such  a  combina- 
tion is  to  increase  the  price,  whilst  reducing  the  cost,  of  the 
product;  although  it  must  be  remembered  that  this  tendency 
may  be,  in  a  greater  or  less  measure,  counteracted  by  fear  lest 
increase  in  price  may  lead  to  a  decrease  in  consumption,  or  call 
into  existence  rival  producing  agencies  or,  under  certain  circum- 
stances, lead  to  interference  by  the  state. 

The  productive  wealth  of  the  country  consists  of  the  mate- 
rial products  of  past  labor  which  have  not  been  consumed,  but 
economized,  and  which  are  now  employed  as  agencies  to  produce 
further  wealth,  and  of  nothing  else;  the  country  is  therefore  ren- 
dered neither  richer  nor  poorer  by  the  placing  on  the  market  of 
large  amounts  of  share  capital  in  such  combinations  as  those 
under  consideration,  unless  possibly  this  may,  to  some  extent, 

621 


cause  foreign  capital  to  seek  investment  here;  I  do  not  feel  rom- 
petent  to  say  whether  it  could  have  this  effect  to  an  appreciable 
extent;  if  it  could,  pro  tanto  it  would  be  desirable;  otherwise  I  see 
nothing  desirable  in  it,  for  it  simply  changes  the  form  of  owner- 
ship of  the  things  which  alone  have  real  value.  On  the  other 
hand,  I  see  no  peculiar  dangers  which  it  involves  either  to  the 
individual  investor  or  the  financial  system  of  the  country.  The 
former  may  often  lose  his  monev  through  injudicious  invest- 
ments in  such  share  capital,  for  it  is  an  old  maxim  that  "a  fool  and 
his  money  are  soon  parted,"  and  a  large  proportion  of  individual 
investors  are  too  greedy  and  conceited  to  show  common  sense  in 
their  investments ;  but  their  money,  although  lost  to  them,  is  not 
lost  to  the  community;  it  goes  into  the  pockets  of  others  who  are, 
on  the  whole,  at  least,  equally  deserving  and  more  shrewd  and 
judicious,  and  therefore  more  likely  to  make  a  beneficial  use  of  it. 

The  tendency  of  the  combinations  must  be  to  decrease  the 
demand  for  the  kinds  of  labor  employed  in  their  work,  and  conse- 
quently to  reduce,  at  least  temporarily,  the  compensation  received 
by  wage-earners  generally  throughout  the  country.  The  natural 
effects  of  this  on  the  condition  of  the  latter,  speaking  very 
broadly,  would  be,  first,  more  or  less  individual  hardship  and 
suffering,  and,  afterwards,  in  the  United  States,  the  conversion  of. 
some  among  them  into  agriculturalists  through  the  cultivation 
of  a  larger  area  of  our  land. 

Emphatically  no  legislative  action  in  regulation  or  restraint 
of  combinations,  whether  by  Congress  or  State  legislature,  is  de- 
sirable. Our  public  men  (with,  I  need  not  say,  some  honorable 
exceptions)  are  wholly  unfit  to  deal  with  any  such  matters.  The 
attempt  will  be  highly  demoralizing  to  all  concerned,  the  practi- 
cal results  (except  in  the  levy  of  blackmail)  altogether  nugatory. 


CHAELES  A.  SCHIEREN. 

Ex-Mayor,  Brooklyn. 

I  am  deeply  interested  in  the  subject.  It  is  one  of  the  leading 
questions  of  the  hour.  Evidently  trusts  have  come  to  stay.  They 
are  formed  in  almost  every  'commodity  manufactured  in  this 
country. 

I  have  watched  with  special  interest  the  progress  made  by 
the  United  States  Leather  Company — so-called  Leather  Trust — 
it  being  in  my  line  of  business.  This  trust  was  formed  about 
six  years  ago.  It  has  only  been  partially  successful.  It  has  not 
checked  competition;  on  the  contrary,  those  tanners  outside  of 

622 


the  trust  seemed  to  have  profited  by  the  formation  of  the  big 
company.  While  the  trust,  by  operating  all  their  tanneries  upon 
a  uniform  plan,  may  have  reduced  the  cost  ( f  tanning  leather, 
still  their  fixed  charges  on  their  enormous  capital  are  so  large 
that  they  cannot  reduce  prices  if  they  wish  to  earn  a  small  divi- 
dend on  only  their  preferred  stock.  This  enables  their  competi- 
tors not  only  to  meet  prices,  but  in  some  instances  make  the  mar- 
ket price  of  leather. 

The  principal  cause  is  overcapitalization  -and  buying  old  and 
unproductive  properties,  thinking  thereby  to  stop  competition. 
The  result  -has  been  that  active,  enterprising  men  with  sufficient 
capital  for  their  business  have  erected  modern  factories  with 
up-to-date  improvements,  and  successfully  compete  with  some 
of  these  trusts. 

There  may.  be  exceptions,  but  the  average  combination  or 
trust  is  built  upon  these  lines,  and  with  their  antiquated  facilities 
and  watered  stock  they  expect  to  compete  with  wideawake  busi- 
ness men.  While  trusts  may  be  a  menace  to  business  for  a  while, 
on  the  whole  they  are  not  as  dangerous  as  generally  believed  to  be. 

Overcapitalized  trusts  must  either  reorganize  on  a  proper 
basis,  or  reduce  their  capital  to  real  value,  else  fall  to  pieces  of 
their  own  weight.  When  reorganized  with  actual  capital,  they 
will  come  into  line  with  business  concerns  having  actual  capital 
invested.  No  special  legislation  is  necessary  nor  desired.  Such 
laws  hardly  mitigate  the  evil.  Business  laws  are  based  upon  com- 
petition, and  that  will  suffice  to  bring  even  our  immense  trusts 
to  terms. 

WILLIAM  WIET  HOWE. 

New  Orleans  Board  of  Trade. 

When  I  came  to  this  meeting  as  a  delegate  from  the  New 
Orleans  Board  of  Trade,  I  prepared,  at  the  request  of  the  Civic 
Federation,  a  paper  on  some  of  the  questions  here  in  debate ; 
but  when  by  your  kindness  I  was  called  to  preside  over  your 
deliberations,  it  was  deemed  more  becoming  that  your  chairman 
should  not  undertake  to  express  any  views  on  these  questions, 
or  undertake,  even  if  I  could,  to  influence  any  opinion.  And  so, 
with  a  little  of  that  paternal  anguish  which  may  have  visited  the 
soul  of  Abraham  when  he  thought  himself  in  conscience  bound 
to  sacrifice  his  son,  I  suppressed  the  little  paper.  The  suppres- 
sion was  fortunate,  because  if  the  paper  were  to  be  written  this 
evening  it  would  be  a  better  one,  for  the  reason  that  its  author 
has  learned  a  good  deal  in  the  last  four  days. 

623 


In  what  are  called  courts  of  conciliation,  in  some  jurisdic- 
tions, the  constant  aim  of  the  presiding  magistrate  is  to  note 
those  admissions  and  concessions  of  the  contending  parties  them- 
selves which  may  be  found  even  in  apparently  hopeless  disputes, 
and  to  make  those  admissions  and  concessions  a  basis  for  a  judg- 
ment substantially  just. 

Now,  following  this  sensible  idea,  where  do  we  stand  after 
four  days  of  discussion,  always  interesting,  often  profoundly  sci- 
entific, and  sometimes  passing  into  the  brilliant  sphere  of  ora- 
tory? It  seems  to  me — simply  as  an  individual,  of  course — that 
almost  every  paper  or  address  we  have  heard  has  made  some  ad- 
missions or  concessions  which  may  form  a  basis  for  some  conclu- 
sions, and  if  you  will  allow  me  I  will  formulate  some  of  them 
only,  as  follows : 

1.  Combinations  and  conspiracies  in  the  foian  of  trusts  or 
otherwise  in  restraint  of  trade  or  manufacture,  which  by  the 
consensus  of  judicial  opinion  are  unlawful,  should  so  be  declared 
by  legislation,  with  suitable  sanctions,  and,  if  possible,  by  a 
statute  uniform  in  all  jurisdictions,  and  also  uniform  as  to  all 
persons,  and  such  a  statute  should  be  thoroughly  enforced,  so 
that  those  who  respect  it  shall  not  be  at  a  disadvantage  as  com- 
pared with  those  who  disregard  it. 

2.  That  the  organization  of  trading  and  industrial  corpora- 
tions, whether  under  general  or  special  laws,  be  permitted  only 
under  a  system  of  careful  governmental  control,  also  uniform, 
if  possible,  in  all  jurisdictions,  whereby  many  of  the  evils  of 
which  complaint  is  now  made  may  be  avoided. 

-3.  The  objects  of  the  corporation  should  be  confined  within 
limits  definite  and  certain.  The  issue  of  stock  and  bonds,  which 
has  been  a  matter  of  so  much  just  criticism  and  complaint,  should 
be  guarded  with  great  strictness.  If  mortgage'  bonds  seem  to 
be  required,  they  should  be  allowed  only  for  a  moderate  fraction 
of  the  true  cash  value  of  the  property  that  secures  them.  As 
for  issues  of  stock,  they  should  be  safeguarded  in  every  possible 
way.  They  should  only  be  allowed  either  for  the  money  or  for 
property  actually  received  by  the  company,  and  dollar  for  dollar, 
and  when  the  property  is  so  conveyed  it  should  be  on  an  honest 
appraisement  of  actual  value,  so  that  there  may  be  no  watering 
of  stock. 

4.  And  finally,  there  should  be  a  thorough  system  of  reports 
and  governmental  inspection,  especially  as  to  issues  of  bonds  and 
stock  and  the  status  and  value  of  property,  whether  cor- 
poreal or  incorporeal.  Yet,  at  the  same  time,  in  the  matter  of 
trading  and  industrial  companies,  there  are  legitimate  business 

624 


secrets  which  must  be  respected  by  the  general  public.  In  short, 
we  need  to  frankly  recognize  the  fact  that  trading  and  industrial 
corporations  are  needed  to  organize  the  activities  of  our  country, 
and  that  they  are  not  to  be  scolded  or  belied,  but  controlled,  as 
we  control  steam  and  electricity,  which  are  also  dangerous  if 
not  carefully  managed,  but  of  wonderful  usefulness  if  rightly 
harnessed  to  the  car  of  progress. 

5.  We  agree  without  dissenting  voice  in  thanking  the  Civic 
Federation  of  Chicago  for  furnishing  this  opportunity  for  edu- 
cation, and  the  people  of  Chicago  not  only  for  a  hospitality  as 
large  as  its  limits,  but  for  the  object-lesson  their  city  affords  to 
teach  us  what  can  be  done  in  America  by  enlightened  public 
spirit  in  associated  effort. 

Gaines,  of  Tennessee,  introduced  the  following : 

"We  have  met  here  in  convention  through  the  courtesy  of  the 
Civic  Federation  and  the  city  of  Chicago.  We  have  been  royally 
entertained,  not  only  by  the  convention  itself,  but  by  the  citizens 
of  Chicago.  A  vote  of  thanks  is  extended  to  the  Civic  Federation 
and  to  Chicago;  to  our  distinguished  chairman,  who  has  proved 
himself  peculiarly  efficient  and  manifestly  fair;  to  the  conference 
secretary,  and  to  those  who  by  their  participation  have  made  the 
conference  a  success." 

The  resolution  was  unanimously  adopted. 
The  report  of  the  committee  on  resolutions  was  presented  by 
Chairman  Luce  as  follows : 

"Your  committee  begs  leave  to  report  that  after  discussion 
and  carefu]  deliberation  it  has  adopted  the  following  resolu- 
tions : 

"Whereas,  The  call  of  the  Civic  Federation,  under  which  this 
conference  is  gathered,  inviting  us  to  consider  the  subject  of 
trusts,  contains  the  following  language: 

"'While  it  is  not  expected  that  a  thorough  investigation  of 
even  any  branch  of  this  great  question  can  be  made  in  so  short  a 
time,  it  is  hoped  that  a  beginning  may  be  made  and  a  plan  adopted 
for  following  up  the  work  along  practical  lines.  The  local  com- 
mittee in  charge  of  the  arrangements  is  composed  of  representa- 
tives of  all  political  parties  and,  as  indicated  on  this  letterhead, 
is  chosen  from  the  various  walks  of  life.  The  committee  has  no 
ideas  or  schemes  of  any  kind  to  place  before  the  conference.  Its 
members  have  different  views  on  the  problems  to  be  discussed,  but 

625 


are  agreed  on  the  proposition  that  a  fair  hearing  should  be  given 
at  the  conference  to  all  sides,  and  that  everything  should  be  done 
to  make  it  of  value  to  the  public  from  an  educational  rather  than 
a  political  standpoint/ 

"Therefore  be  it  resolved,  That  in  the  opinion  of  the  com- 
mittee on  resolutions,  this  conference  is  without  authority,  and 
it  would  be  inexpedient  for  it  to  adopt  resolutions  purporting  to 
declare  the  sense  of  the  conference  upon  any  aspect  of  the  subject 
of  discussion." 

The  report  was  adopted  without  debate. 

On  motion  of  Louis  F.  Post  the  convention,  at  5 :50  o'clock, 
adjourned  sine  die. 


626 


